Many home buyers, especially first-timers, are completely unaware of all the ways they can mess up when buying a home. If you’re buying a home in the near future, it is important to avoid doing these things during the home buying process, because they can derail your loan application.
Don’t Miss Payments
Pay all of your bills on time.
Even if you have pre-approval in place or the lender has issued a loan commitment, it is extremely important to continue to make your payments on time.
Recently a buyer was also selling a home at the same time. They closed on the existing home but failed to make the final mortgage payment.
This went on their credit report and prevented them from getting the loan on the new home. They did finally get a loan, but it was less favorable. Plus, this all caused a delay in the process and they lost thousands of dollars
Don’t Change Your Job
If you change jobs before or during the loan process, it can create problems in qualifying for a home loan. This is especially the case if the new job is in a different line of work or at a lower rate of pay.
Changing jobs during the loan process can also create time delays because the new job will have to be verified.
Don’t Change Banks Or Move Money Around
When you get pre-approval, it is based on your current financial state. The goal is to maintain that until the loan closes.
Moving money to a new bank interferes with the verification process for your home loan. Leave your money where it is until your loan closes, unless your loan officer tells you otherwise.
Don’t Deposit Cash
This may seem counterintuitive, because generally more money is better, but cash deposits can cause problems for you when buying a home.
Only deposit funds into your accounts that can be documented. Show the source such as a pay check or gift check.
Don’t Make Any Major Purchases
Borrowers often make the mistake of making major purchases while buying a home, but they don’t realize the negative impact this can have on the home buying process. For instance, buying a new car can change your debt to income ratio which can make it more difficult to get your loan approved.
Don’t Close Credit Card Accounts
Closing a credit card account can affect your ratio of debt to available credit, which can impact your credit score 30 percent.
This also applies to consolidating bills, which people often think will help them when buying a home. Close accounts before you start the home buying process, or wait until you have completed the home purchase.
Don’t Apply For New Credit Of Any Kind
Every time someone pulls your credit report, it can have an adverse effect on your credit score. So don’t apply for new credit or open new lines of credit during the mortgage process.
Don’t Fail To Disclose Information
Your lender may have difficulty approving your loan if there are financial surprises during the loan process. Up front disclosure to the loan officer allows time to work on potential problems.
Don’t Spend Your Closing Cost Money
When buying a new home, it is very tempting to spend money on new furniture or appliances. Since you’re not supposed to open new lines of credit, you may be tempted to hit your savings. It’s important to stay strong and save the money you have set aside enough for closing costs, because you need these funds in order to close on your new home.
We Can Help You Avoid Costly Mistakes
When buying a home, DO work with a local home buying expert. Working with a pro will help you avoid costly mistakes, and will help you save time. Get in touch with us today at 919-887-5114.