So you're in Escrow...

...great! Now all that's left is the 30 something days till the home is mine! Think again. After many weeks (or months) of searching online, going to open houses, writing offers, getting rejected then finally getting accepted, the hard part is done; or so you thought.

Escrow, simply put, is the process of transferring a free and clear title from seller to buyer. During this time, your loan application (assuming this isn't an all cash deal) is put under scrutiny by dozens of people to make sure everything is correct, valid and current. Throughout Escrow, your credit score and financial assets will be checked periodically. If anything changes for the worst, everything is put on hold, and if there's too many delays, you could essentially fall out of Escrow.

Joe and Lisa (names have been changed) had stellar credit. In fact, Joe had a FICO score of over 800! Rare, but achievable. Together, he and his wife only had three open lines of credit; two credit cards and one truck payment. Joe was pre-approved by a major bank, and everything was going well. We made an offer on a great starter home for them. Joe worked as a contractor, and got a bonus once his last job was completed. So, he decided to reduce more of his debt and pay off his truck. Sounds reasonable, right? Well, in his case...not so reasonable.

Why is that? Well, in order to be approved for a mortgage, the bank wants to see that you have at least three open lines of credit. Joe just closed his third line. The bank caught that and therefore could not move forward with his loan. We lost out on that one home. Still determined to buy, Joe got a gas credit card, waited a few weeks for it to appear on his credit report, and re-applied for a mortgage. It worked! He was approved through another bank, and we were able to resume our search. Joe and Lisa found the perfect little one-story, three-car garage. Just right for the family, two cars and the ATVs.

The moral of this story...make sure you know the lending rules and requirements. Here's a little list you can follow while you're in Escrow.


Until your Escrow is closed, DO NOT:

1. Change your job or profession
2. Decide to be unemployed
3. Damage your credit by missing payments or stop paying bills
4. Buy a high dollar item, such as a luxury car or boat
5. Apply for new credit cards
6. Buy new furniture
7. Make any high dollar purchase on any credit cards
8. Make any changes to decrease savings account
9. Co-sign for anyone for anything
10. Delay completion of any paperwork requested by the mortgage company.