In today’s housing market, buyers need to be strategic to get the home they want. There are some simple practices you can use when house hunting that will help you. There are also some things that you should not do when trying to buy a home!! Buyers sometimes forget little details because they are thinking only of the new home. Here are some things you do not want to do when you are thinking about buying a home.
- Don’t finance a car or any other big item before buying a home. This can affect your credit score but more importantly, it can affect your debt to income! If you know you need a new vehicle, plan for the payment when you are talking to your lender, but try to avoid buying a new car until after you have bought your home. I had a client that needed a new car due to an accident, we planned for it – she couldn’t wait, so we made sure the car dealer didn’t send her car loan application to more than 1-2 different banks and we kept her car payment where it had to be for her to qualify for the new home. But it would have been a lot easier if she had been able to wait!
- Don’t max out credit card debt. Ideally you want to pay off your credit card balances every month. If you can’t do that, try to keep your balance at about 25-50% of the available credit. So if your credit limit is $2000, you want the balance to be under $500 if possible. That will help your credit score and also the payment the lender has to qualify you with.
- Don’t quit your job or change careers before buying. Consistent employment is essential when you are looking at getting a mortgage. Job changes can create a lending nightmare, so try to avoid it. I just had a client switch jobs and I didn’t know about it. We were trying to do the final employment verification before closing and it turned out he had given his notice!! I called him and found out he had a new job but didn’t think to tell me about it. We had to verify that new employment and underwriting had to review the file again. Luckily his job was the same line of work and an increase in salary. If you switch from hourly or salary to commission or self employment, you will need to wait at least a year, but possibly two years before we can use that income in qualifying.
- Don’t assume you need 20% down. Many first time homebuyers only have 3-5% down and that is ok! There are many that use down payment assistance programs and only need $1000 into the transaction! If you wait until you have 20% down, you may be waiting a long time to buy!!!
- Don’t shop for homes without a preapproval. There is nothing worse than finding a home you love and then finding out you can’t afford it!! Get preapproved so you know what you can afford and make it easier to get your offer accepted!
- Don’t make any financial changes before closing! Remember your lender will check your credit right before closing to see if there are any new inquiries or new debt. If there are, you will need to explain any inquiries and document any new debt. That new debt could put you over your debt to income ratios and then you may not qualify for the home. Don’t switch jobs, we need to get a verification of employment right before closing to make sure you are still working and nothing has changed.
Avoiding these items will make it much easier to get your mortgage approval and to keep it! There is nothing worse than having your offer accepted on a home and then finding out you did something that affects your loan approval. If you aren’t sure about something, talk to your loan officer. Make sure you aren’t doing something that will affect your loan approval!!
As long as you avoid these mistakes, you should be on the right track to home ownership! Enjoy the journey!!
Leslie Vanderwerf, NMLS ID#335509, Cross Country Mortgage LLC, An Equal Housing Lender, NMLS#3029 – Email – Website
