3 Things You Should NOT Do Before Buying a Home
Thinking of Purchasing a Home?
There are many things we are told to do, not too many people tell you what you should not do.
1. Don’t Make Any Large Purchases
Don’t buy a car! Or make large purchases of any kind; especially on credit. This includes electronics, jewelry, vacations, that dream wedding & furniture. This reduces the amount of money in your savings or negatively effects your debt to income ratio. Or both. This will lessen your purchasing power & raise red flags with the underwriter, who ultimately determines whether or not you can purchase a home. With guidelines as tight as they are today, it is important you think ahead. As for furniture, we understand how exciting it is to furnish a new place, however we urge you to wait. Your credit will be re run again before closing to look for any discrepancies & we have heard horror stories about buyers being denied a loan because of a major furniture purchase. You don’t want to be the proud new owner of furniture at the expense of your new home, do you? Wait until after settlement!
2. Don’t Move Money Around
While it seems logical to move all your funds into the account you will be writing your large down payment check from, don’t do it yet! Underwriting is a rigorous undertaking in this market & any and all deposits & withdrawals (large or small) can or will be looked into. Speak with a loan officer first & ask him or her how & when to move your money. This way you can keep a record of all pertinent transactions & make your life a little less stressful when it comes time to compile your file for your mortgage. If you are getting gift money speak to your loan officer about the source (usually has to be from a family member), seasoning (how long it has to be in your account) & how they need this documented (often a gift letter & receipts showing the money leaving one account & entering the other).
3. Don’t Change Jobs
Salaried employees who are not changing their line of work should not have a problem. Hourly employees working full time also should not have a problem. Don’t take our word for it, guidelines change often. If you are using a bonus or commission structure as part of your income, the bank will usually take the average over two years. This poses a problem when you change employers as your commission/bonus structure can not be documented & the uncertainty of income can often result in a denial or diminished purchasing power. The best thing to do is to run your scenario by a seasoned & professional loan officer who can determine what can hurt your ability to purchase.
Buying a home can be a difficult process to navigate alone. We have a few buyer’s agents on our team who can help & we maintain strong relationships with a variety of affiliated professionals who can help guide you through the process. Let us do the leg work so you can focus on the fun stuff…like buying furniture after you close! Contact us today..we love to help!