Don’t Do This While Closing On A House

Don’t Do This While Closing On A House


You’re in the process of buying a
property. It’s either a home for you to live in, it’s an investment property. And
I’m telling you right now that there are 2 things that if you do them, you’re
going to freaking kill the deal and you’re going to be heartbroken and disappointed.
And most people don’t know what these 2 things are. My name is Kris Krohn.
I’ve done a billion dollars worth of real estate, spread over 4,000 homes. And
today, I’m going to share with you the 2 things you shouldn’t do. And at the
end, I’ve got a bonus a gift just for you. Hey, what’s up? Kris Krohn here. And I am
joined by Derek. How we doing, bro? -Good Kris. -Derek is a member of the Kris Krohn real estate power team. He actually works with a lot of our partners. Derek,
we’ve actually known each other for… -Almost 7 years. -7 years now. And
it all started with the whole real estate game. -It did. -And what are you
guys doing right now? We are under contract on our first deal, Kris. And
even though it’s taken this long, we have done it. We are so stoked. -Dude, I’m so
proud of you. You know, it’s amazing to like kill it in real estate. There’s a
journey. I remember how long I had to wait before
I could actually buy my first house with the strategy that I was pursuing. So, good
for you and Kaley. I’m excited for you. -Very excited. -Today’s video is a
cautionary tale. We recently had a partner that did something that really
managed… Just it killed the momentum on their ability to buy a home. And they did
something and they didn’t know where like, “Dude, we need to tell the world about
this. Because when you’re out there doing real estate and you’re buying.” There are
some things that you should be doing and there’s some things that you should not
be doing financially during the purchase process. So, tell us what happened with
this partner that got under contract and what killed the deal right before
closing. -Well, typically, when you go under contract, you start having to
give all this information to the lending team. Because they need to close the loan.
-Yep. -And what she did before she closed on the property completely was she
drained a HELOC that she had already set up. -What does that mean drain the HELOC?
-Well, she had set up a home equity line of credit which is basically
another mortgage on the home that she utilized to invest. -Yes. -And a lot of
people use this strategy to invest in real estate. And it’s a viable
strategy. Needless to say that before the closing came up, she had pulled
everything out before the bank was to close on the loan. -Okay. So, she basically
was pre-qualified. She changed her financial status and situation. And the
bank always checks right before closing if things are the same as when they
started just a month earlier. And if there’s an inconsistency, the
underwriters say, “No dice. This is a high-risk situation.” And was she able to
close on the deal? -Unfortunately not. Killed it. -No. -And she lost the property.
-No. So, she lost the deal. And so, here’s the reality: This is what you need to
understand. Banks are finicky and banks are really weird.
And there’s things that you should know. There’s 2
main rules that I want you to know. Number 1, when you’re in the process of
buying a property, you should not be making other purchases that require
credit or change what’s called your debt to income ratio. Which means like you
should be buying a car. You shouldn’t be working on buying another house. By the
way and it’s not that you can’t do those things. But you have to come clean with
your lender and say, “Hey, at the same time I’m doing this loan, I’m also doing this
thing.” And if they run the numbers and say, “No, problem.” Then you’re actually fine.
But if they say, “Oh, that messes up the ratios, dude.” And as a result, it’s going to
kill the deal. Then it’s like, it doesn’t mean you can’t do it, it just means don’t
do them at the same time. You do them one at a time. Because she could have pulled
the home equity line just after the closing. And that would have worked too.
-Once you’re able to fund the deal. -Should’ve been almost from the deal. So, that’s the first rule is don’t take out any additional loans that met with
mess with your debt to income ratio without your lender knowing. But here’s
the second one: You need to make sure that you don’t mess with your credit
score. Every single time you go and you’re shopping at the gap and they’re
like, “Oh, my gosh. You can save 20% if you open up a gap credit card.”
You’re like, “Dude, I’d love to save 20%.” Because apparently we’re in
California. And you don’t realize that when they say, “Yeah, we
just need your name and address and social security number.” They’re pulling
your credit. And some of the credit bureaus are going to drop your credit score
3 to 7 points right then and there just for looking at your credit.
And I remember my wife and I, we learned this the hard way Derek. We were getting
ready to purchase like one of our first investment properties. I think was like
the third or fourth home. And that month, we had gone to Target and and got the
credit card and Sears and JC Penney’s and the Gap. And like in one month, we
somehow managed. We’re like, “This is amazing.
We could like save free money everywhere. Just by opening up the in-store credit
card.” Not realizing that we had dropped our credit score like 30 points in 30
days. Now, that’ll bounce back in 90 days. But I needed my credit right then and
there and it really messed it. You know, those are just 2 things that people
don’t know. Careful not to have high… Any kind of loan activity during a
qualification period. Unless it’s authorized by your lender. And don’t take
out loans or don’t buy cars or don’t buy things that mess with your income ratio.
Or produce additional loans. Because if you
do, it can actually kill the ability for you to get a deal. So… Listen, today’s
video is totally in service of just helping you make super smart moves in
your life. Thank you so much for watching today. By the way, as promised, some of you
want to get deeper into the game of real estate and you actually want to know, are
there more resources to get questions answered. Like, “Kris, it’s so great that
we can watch this video.” But what about all the videos that I’m not making that
aren’t answering the questions that you have.
First of all, comment below and let me know what questions you have. We make a
lot of our videos based on what you’re inquiring about. But more importantly, in
the link below, there’s a hotline where you can actually access Derek and my
super insanely knowledgeable team. And you can pepper them with as many
questions as you want about the investment process, getting a
loan, how to do things, how to put up a game plan together. And there are people
all over the world that actually appreciate and have opportunity to
access his amazing tool. Because I got a team of 200 experts. And Derek is like
Center point man on my team with a number of others that all information
flows through. So, he wanted me to make this video today because this is I think
screwed up 3 deals in the last? -We’ve had a few trip ups. -In the last couple of
months. And we know that if we’re experiencing that, then people around the
world probably are as well. So, today is for service of you knowing that. Click
the link below. Learn more about getting that real estate hot line so you can
learn how to crush it in the game of real estate. Access people like my friend
Derek here and the incredible job knowledge base that he has. Other than
that, make sure that you subscribe and ring that Bell.
In fact, smash the like button on this video because it tells YouTube that this
was knowledge that was useful for you. And hopefully they end up promoting and
sharing it with more people. Because the goal is to get this information to as
many people as possible. Thank you so much for watching. Go crush
it in the game of real estate and we’ll see how tomorrow’s video.

8 thoughts on “Don’t Do This While Closing On A House

  1. Kris, could you do a video about how to leverage Fund & Grow i.e. using 0% business credit cards while partnering with you?  I watched an older video of yours where you did a presentation and talked to the audience about how using debt properly is essential to building wealth.  During that presentation you dropped the phrase, "I don't call them credit cards.  I call them investment cards"  I am curious in general how you have used credit cards wisely to buy assets and therefore build wealth.  Thanks!

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