10 Commandments When Buying A Home. 🏡⠀
Here are a few things you need to know when you are ready to own your next home.
#10. THOU SHALL NOT CO-SIGN A LOAN FOR ANYONE. ⠀
Co-signing on a loan will raise your debt-to-income ratio. You could ruin your credit and may ultimately prevent you from qualifying for a mortgage. ⠀
#9. THOU SHALL NOT CHANGE BANK ACCOUNTS.
Most lenders will require two months of your bank statements to verify closing costs and down payment monies. They may also require that all funds be sourced and seasoned. It is extra paperwork they will require and you need to do. Your dream home may not be there tomorrow so why risk it.
#8. THOU SHALL NOT MAKE ANY LARGE DEPOSIT WITHOUT CHECKING WITH YOUR LOAN OFFICER.
Unusual large deposit could indicate that the borrower has opened a loan account or credit which could put their loan application in jeopardy. It could mean monthly payment that may affect your debt-to-income ratio which could affect your qualification. The lender would require further documentation to prove its source. Don't make it complicated and just don't do it without consulting with your loan officer first. One quick phone call can save you headaches.
#7. THOU SHALL NOT BEGIN ANY INQUIRIES INTO YOUR OWN CREDIT. ⠀
As a Realtor, I advise you NOT to run hard inquiries on your credit without reaching out to your loan officer first. These are when other lenders and credit card companies pull your credit report. It could potentially affect your credit score negatively and may prevent you from getting into your dream home.
#6. THOU SHALL NOT PURCHASE BIG-TICKET ITEMS ON CREDIT
When purchasing a home, your credit is monitored right up to the day the contract is signed. Until the keys are in your hands, the lender is going to scrutinize almost every meaningful transaction you make. You are not done until the loan closes my friend so just wait until your agent says escrow has closed and then you can buy these items to your heart's content.
#5. THOU SHALL NOT OMIT DEBTS OR LIABILITIES FROM YOUR LOAN APPLICATION
The mortgage underwriting process is very thorough in reviewing your entire financial history before the loan is approved. Omitting any information will only make you look more of a credit risk. Misleading even on the smallest debt or liability can make your dream home disappear. If you want to make that a reality, then disclose ALL financial debts or liabilities. It's for your own good. Besides, you really don't want to get into a house you can't afford in the first place and risk foreclosure, do you?
#4. THOU SHALL NOT SPEND MONEY YOU SET ASIDE FOR CLOSING.
When you get pre-approved for a loan, it is based on certain information and documents you submitted at the time of the pre-approval including the amount of money you have saved up for down payment and closing costs. Lender will check those information again to make sure nothing significant changed. So, MONIES FOR CLOSING COSTS - save it, don't spend it.
#3. THOU SHALL NOT USE CREDIT CARD EXCESSIVELY OR LET CURRENT ACCOUNTS FALL BEHIND.
Using your credit card excessively will increase your debt to income ratio. Falling behind on your current open accounts will affect your credit score negatively. These are two of the few factors used by lenders to determine your credit worthiness. Really, whether you're applying for a home loan or not, it's just a good principle to practice.
#2. THOU SHALL NOT BUY A VEHICLE OR A BOAT FOR THAT MATTER
Next to a house, a vehicle or a boat is one of the biggest purchases you'll ever make. A new auto or boat loan may impact your loan application in a negative way. A new monthly payment will be a part of your debt-to-income calculation that may raise your ratio which could undermine your eligibility for mortgage. So unless you like paying for your landlord's investment, thou shall heed this 2nd commandment. Don't want to be living in your car or your boat, do you? After escrow closes, go crazy but not too crazy, you still don't want to stretch yourself.
#1. THOU SHALL NOT CHANGE YOUR JOB OR QUIT YOUR JOB.
Income, work history and job stability are factors usually considered by the lenders paramount to your ability to make payments.
Changing jobs or even self-employment can make it difficult to show a consistent income. Quitting your job before closing may cause your loan to be denied. Lenders prefer a consistent job history in addition to verified adequate earnings. You need to be able to prove your capacity to repay what you will owe. Feel free to explore other work opportunities after you close escrow if you must.