Don’t Do These Things When Purchasing Your Home
By Monica DeVore
You’ve worked incredibly hard preparing to purchase your first or next home. Your credit scores have hit the mark. You’ve had an initial meeting with your lender and learned your hard work and determination have paid off. You’re pre-qualified and your home search is off to a great start. Congratulations!!!
To keep it moving on a positive track to closing day, PLEASE avoid the following innocent mistakes many buyers have made before you. I can’t stress these things enough. One alone can put an abrupt halt to getting the keys to your dream home.
Don’t Apply for Any New Credit Cards or Lines of Credit.
The holiday season is here. Every store will be offering instant discounts for your purchases if you apply for their credit card. “Happy Holidays, but not today!” Even if you don’t use it, hard credit inquiries can lower your score. Lenders look at your debt-to-income ratio, too. Increasing your debt could jeopardize your final loan approval by pushing you over those limits
You’ve found THE house and in your mind have already decorated it. I know, I get it! I’ve had clients tell me they’re out looking to purchase new furniture and appliances for their new home. Keep the creative juices flowing, this is wonderful. But, NO financed purchases before closing on your home
This includes no co-signing on any loan. That debt, regardless of who is making the payment, will be included in YOUR debt-to-income ratios.
It goes without saying…that new car can wait. Remember – KEYS to new home in HAND first!
Don’t make late payments or skip a payment.
I know this sounds like a no-brainer, but anyone can get caught up in the excitement! Just not so much that you forget to pay everything on time. On-time and in-full payments are one of the most important pieces of your credit score. Laser focus on those got you here!
Don’t close any credit accounts.
I made this mistake years ago, attempting to get my financial house in order. I closed unused credit cards I had had for years; moved balances to zero-interest cards. This may be a smart move financially, but timing is everything. Wait until after closing.
Hang onto your Savings.
More than likely you’ll be using a chunk of savings for your down payment and/or other costs associated with your home purchase. Have you calculated the costs for the actual move? Also, keep in mind, you’ll find new items you need or want once you’ve moved into your new home. (That furniture?)
Maintain a Paper Trail of All Money Movement
When you meet with your lender, one of the first questions will be about your source of funds for down payment and closing costs. So, if any there have been any unusual deposits, you’ll need to provide documentation. The most tedious part of the process is gathering all those seemingly endless list of documents.
You’ll most likely be required to provide statements for the last two or three months for checking, savings, stocks, mutual funds, possibly your 401K. Be prepared with complete and accurate records. If possible, go ahead and move all funds into one account before you start the mortgage application. If you haven’t moved it yet, leave your money where it is until you talk to a loan officer.
Don’t Make Any Unnecessary Employment Changes
It’s best to avoid any employment changes during the course of the loan application process. Some changes will not have a tremendous impact on getting final approval, but others can be disastrous. I understand sometimes things happen which we have no control, but if you are aware of any changes that will occur before your closing date, notify your lender. Full-time or part-time work. You don’t want to encounter a problem the day before your closing!
Tennessee Valley Realty wants your home buying journey to be as smooth as possible – from the moment you start the mortgage loan process until you’ve signed the final document at closing. Don’t provide any red flags for your lender. Avoid these seemingly insignificant and innocent mistakes and the keys to your new home will be in your hands before you know it!
