So you’re on the hunt, the ink is still wet on the pre-approval letter clenched in your fist. Your Realtor is showing you amazing homes and the excitement of buying a new home is overwhelming you. There are a few simple rules, that if followed, can make a huge difference in financing your home.
- Don’t acquire any new debt. It may be very tempting to go out and look at new furniture and buy it 90 day same as cash, or take advantage of those discounts at the register (10% off for opening a Kohl’s card etc.) but you must leave those temptations at the till. They may seem like simple transactions but even the slightest change in your debt to income ratios and you could be looking at a smaller home (or no home at all). New cars are the worst – long term debt and the payments are usually $200-$400 per month, significantly modifying your debt to income ratios… if you do buy a car, make sure you love it – you may live in it!
- Do not spend money you have set aside for closing. I think this goes without saying for most people, BUT I have to say it. Many people think, “I’ll have it in there when we close.” Little do they know that the underwriter has to verify those funds and may even do so more than once. If those funds aren’t there, you’re not qualified. Additionally – the Washington Purchase and Sale agreement states that you have the funds available and can close, not having the money in the bank could cost you your earnest money if things got sticky!
- Do not (and this is a biggie) omit liabilities (expenses) or other blemishes on your loan application. Underwriters are very thorough, they will find out. Failing to follow this creed could cost you the loan (not to mention you certify under penalty of perjury that the application is correct). Obtaining a loan with false information is loan fraud too.
- Do not quit your job, change jobs, or become self-employed mid stream. this will almost always cost you the loan (especially the self-employed one!). Things happen and you may unwillingly lose your job, let your Realtor and your Loan Officer know immediately. Usually with time, things can be worked out – loan programs can be changed etc., but don’t willingly quit your job or change careers midway through a home purchase.
- Do not make unordinary or non-typical deposits into your account. Your bank statements will be scrutinized. Unusual deposits must be defended and proved. You’ll have to explain everything. If you get a big check, bonus or the like – make sure you discuss this with your Mortgage Officer.
There are many more no-no’s when buying a home, but these are the main issues I see come up with first time and even established home buyers. If you have any questions or would like to get pre-approved, do not hesitate to contact me!