The Smooth Loan Process #2010-01

You Didn't Ask Me if I Bought a Timeshare Every once in a while, there is a loan application that has little hidden surprises. And, I don't mean the happy surprises like a better interest rate or lower closing costs. Sometimes, the surprises are a little on the ridiculous side of things. This one is one my favorites (and I can't make this stuff up): They were first time buyers with a very limited credit history and very little money to work with for down payment. The credit scores were a little bit on the low side, but could be improved by paying down the balance on a credit card by just a couple hundred dollars. The higher credit score would improve the interest rate, there by making the loan approval much easier to obtain. The buyers were advised to wait until the credit was updated before they put on offer house, but they found the house of their dreams so they decided not to wait. So the plan was in place and the buyers found a house and got their offer accepted. So far, so good. They paid for their home inspection. No problems there. They paid for the appraisal. No problems there either. This is too easy! Now it's time to update the credit report since they've also paid down that credit card. Wait a minute... the score is lower?!?! Wait a minute... what's this new loan on the credit report?!?! Surprise! There was a brand new $10,000 loan on the credit report. To make matters worse, it was reporting 30 days late for the first payment! Immediately, I called the buyers to ask if they new about this mistake. Surely, they would not have taken a new loan at the same time that they were purchasing their first home. Especially after my usual post-application speech of "Don't take any new debt". The buyer's response was not what I was expecting. It turns out that the buyers purchased a timeshare condo just days before they came to see me for the loan application. My original credit report was pulled before the timeshare showed up. I had no idea they had it. A little stunned, I asked them why they didn't tell me about the timeshare when I took their application. The answer is still my favorites to this day. "You didn't ask me if I bought a timeshare." Good point. I did not ask that. However, I do ask if there is are any other debts that are not on the credit report and starting now, I will always ask if you have just purchased a time share. The Smooth Loan Process Lesson: Always disclose all of your debts. Even the ones that don't show up on the credit report. Harold Perkins, Loan Officer The Mortgage Advantage 480-831-1588 Harold@haroldperkins.com