Buying a house can be a mix of emotions, especially if its your first time. Here is some suggestions and tips on what NOT to do when you are getting ready to purchase a new home.
- Do not change jobs – Job Hoppers Beware! Lenders like to see a consistent job history which proves to them you’re going to remain employed and able to pay on your mortgage! If you switch to a new job in the same field, it’s not usually as big of a deal, but at all costs, try and stay where you are until your loan closes. Always check with your lender!
- Do not use your credit cards excessively or allow current accounts to fall behind – if you spend too much money, then how will you afford your payments? If you don’t make payments on time, how will the bank trust that you’ll repay your mortgage?
- Do not go buy a new car – This is a HUGE NO-NO for various reasons. It can drastically throw off your Debt-to-Income Ratio, and will also show new credit inquiries on your credit report thus lowering your score and POSSIBLY disqualifying you for a great rate and oftentimes disqualifying you for your home loan.
- Do not open any new credit accounts – See #2 & #3
- Do not switch bank accounts or banking institutions – Lenders are required to source funds for your down payment, your income, and your earnest money. Changing banks makes their job way harder, and is a HUGE pain in the rear if they cannot verify where your money came from. This can delay your closing significantly.
- Do not spend savings that is designated for your down payment and closing costs. Period. No down payment – no house. No closing costs – no closing.
- Do not buy furniture on credit – See #2, #3, & #4
- Do not make large deposits or cash deposits without first asking your loan officer – See #5 – Cash deposits during a certain timeframe cannot be sourced and are not considered “good funds” that can be utilized as a verifiable down payment.
- Do not be a co-signor for someone else – Bad move. THEIR debt becomes YOUR debt. This can scare off a bank that is doing your mortgage because WHAT-IF the person you co-sign for fails to pay (worst-case-scenario) …and then you are stuck paying on it so it doesn’t ruin YOUR credit – or – if you choose NOT to pay, they will send you to collections, file judgements against you, and ruin your life. On the lighter side, being a co-signor will throw off your Debt-to-Income Ratio and show as a liability on your credit that might affect your credit-worthiness/score.
- Do not get married during your loan application without notifying your lender of the impending marital status change and name change ☺ It will life easier on the people working on your loan docs if they know ahead of time!
Keeley Wagner is a licensed Realtor with The Connors Group at Windermere Group One and a former Licensed Closing Agent. Check out http://www.aprilconnors.com for more information.