THE HOME BUYER 10 COMMANDMENTS
These 10 Commandments Home Buyers must follow may seem like common sense to many. Buyers, however, can sometimes forget with all the excitement surrounding the buying of their new home. I have heard of buyers who saw their home loan turned down and their dream shattered a few days before closing because they had bought furniture for their new home before it became their home. They now have beautiful furniture with no home to put them in.
I always stress that once a buyer gets pre-approved and the process is started, they can’t do anything that might affect their credit.
If you are in the process of buying a home, remember that your credit must not change or be affected in any way until you sign the paperwork and get possession of your new home. Lenders will not only look into your credit when you first get pre-approved, they will check it again (and sometimes again and again) before they let you sign the mortgage. If you want to buy new furniture for your home or change jobs, just be patient. There will always be time to do it after the closing.
If you are looking to purchase a home, do not jeopardize your chance at home ownership. Here are (10) Buyer Commandments of what NOT to do during the home buying process:
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So, you are thinking of becoming a home owner. That’s great! Did you know that the actions you take today, may have an affect on the mortgage you apply for in three or even six months away? It’s very important to get your finances in order and to ensure a smooth ride, there are things that you should NOT do BEFORE buying a home:
1)it’s always best to try to stay in your current job until the house is yours. Lenders like to see consistency. Changing jobs, quitting or becoming self-employed are all bad moves. Your source of income is very important to a lender.
2)~ whether buying a car or getting a line of credit for furniture, a large purchase can increase your debt to income ratio. This will reduce the amount of monthly income available for your mortgage payment and the bank may decide that you can not afford the home.
3)~ if you have significant credit card debt or have a bad credit history, it will definitely hurt your chances of qualifying for a home loan. Make sure your bills are paid on time.
4)~ lenders want to see stability in your financial history – that includes bank accounts. When looking to purchase a home, keep in mind that there are other expenses and closing costs involved. You may have moving fees, want to do some renovations, etc. Be sure to set aside this money and do not touch it!
5)~ be sure to disclose all your debts/liabilities. The mortgage underwriting process is extremely thorough and all your financial history will be looked at before they approve you for the loan. If you omit information, it will make you look like more of a credit risk to the lender. Remember, honesty is the best policy.
6)~ we’ve all been tempted by the 0% interest for 18 months deal. Furniture and appliance stores often have this special offer dangling over your head. Don’t fall for it, until AFTER the home is yours. Don’t be tempted by credit offers or payment plans. Those debits can affect your chances of approving for your mortgage. What good is a new sofa with no home to put it in?
7)~ if you find a site that offers you free credit score checks – don’t do it, this may hurt your credit rating.
8)~ Making large deposits into your bank account while applying for a mortgage, may look suspicious. Be sure to check with your loan officer BEFORE making any large deposits, no matter where the money is coming from. Your loan officer is there to help you get your loan approval and they will guide you and help you make the right decisions.
9)~ You can hurt your chances of getting your mortgage approval by switching banks before or during the mortgage loan approval process. Lenders want to see a strong financial history and that you have stability.
10)~ whatever you do, try to avoid having a co-signer for your loan. If you must, make sure you discuss this with your loan officer to help you make a clear decision.
The home buying process can be frustrating and fun at the same time. It will definitely pay to be prepared and informed before applying for a mortgage. Before you start looking for your dream home, be sure to get your preapproval. Good luck!