No Comments

Financial Mistakes to Avoid When Buying a House

A home is one of the largest purchases you’ll ever make, so be sure to make the most knowledgeable financial decisions you can.

  • Don’t change your job before you submit a home loan inquiry (if you can help it). Lenders want to see stability. And your paystubs.
  • Don’t change banks. This falls under the “stability” category.
  • Don’t buy a car, boat, or anything you’ll have to finance; your debt-to-income ratio is something you don’t want to worsen before you buy a house.
  • Don’t buy furniture on credit before buying. That pesky debt-to-income ratio again.
  • Don’t charge too much on your credit card, or increase your debts too much.
  • Don’t skip out on or be late on payments. This is one of the most important elements of your credit score. You need to show you can responsibly manage money.
  • Don’t make abnormally large (cash) deposits into your bank account. Two months is the amount of time lenders prefer your down payment to have already been sitting in your account.
  • Don’t lie on your loan inquiry. Be honest about all of your income, debts, and liabilities.
  • Don’t co-sign a loan for anyone. even if you’re not the one making those payments, it increases your debt-to-income ratio.
  • Don’t have inquiries made into your credit. Searching for new credit makes you look risky to lenders.
  • Don’t apply for new credit. Applying for credit can lower your credit score, which is something you don’t need right before a lender will be looking at it.
  • Don’t close an credit accounts. It may seem like the right time to get a better balance of your finances, but it can lower your credit since you’ll have a higher usage of debt compared to your limit on one card and to your overall credit availability.
  • Don’t transfer money around without having proper paper documentation. Your lender requires the most recent bank statements, and if you have any unusual deposits, they’ll need to see the origin of funds. If you can, put all of the necessary funds for your home purchase into one account before applying for a mortgage. If you can’t, make sure the funds are available somehow.
  •  Don’t give an earnest money deposit directly to the seller. A neutral party will hold that money until closing in case anything happens to deter the sale of the home.
  • Don’t forget to line up home-owner’s insurance. Your lender will want to see that you’re covered.
  • Don’t forget to have money for closing costs set aside.

Comments (0)