When you decide it's time to buy a new home, it usually will take you a few months to decide if this is a great idea or not. As you think about it and finally make that decision, there are three things you should avoid.
First- do not change jobs. Depending on your work history, a job change could delay your home purchase by 6 months, but it may delay it up to two years. If you switch jobs and you are in the same type of work and still getting hourly pay or a salary with a w-2, you may be ok. If you have a history of switching jobs and have employment gaps, you may need to be on the new job for 6 months. If you go from w-2 income to 1099 or self employment income, you will need a two year history on the new job before you can buy a home.
Second – Do not cancel any credit cards. Some people will go through their credit report and decide they should "clean up" their report and close credit cards. This can backfire on you as it lowers your available credit and can lower your credit score. Don't charge large amounts on your credit cards, make sure you make all your payments on time. You want to keep your credit score as high as possible.
Third – Do not go on a spending spree. Don't make any major purchases before buying a home. A new car payment can lower what you will qualify for. If you need new furniture, wait until after you have bought your home. Do not open new credit cards and make sure you have money in the bank for reserves. Your file will be stronger if you have excess money left over after closing. Once you have found a home, make sure you do not make any major purchases using credit. Your lender will check your credit report right before closing and any new debt or even inquiries can make a difference in your loan approval.
Once you have decided to buy a home, you may want to think about what the new house payment will be and try and save that. If you are currently paying $1000 in rent, but expect to have a $1500 house payment, pay your rent but also put $500 into savings every month. That will help you save money but it will also give you an idea of what it will be like to live with the new house payment.
If you have questions about qualifying for a new home, let me know or talk to your lender. Some times I will meet with clients a few months before they are ready to buy just so that they know what they need to do to qualify for a new home. Most lenders are willing to do that. It's much easier for you to be prepared going into a new home purchase!
Leslie Vanderwerf, NMLS ID#335509, American Mortgage & Equity Consultants – Email – Website
