Things Not To Do When Buying A House
Lending institutions are looking for consistency before lending you thousands of dollars. They do not want to risk giving a loan you can not afford. Many people successful at getting a loan may be just barely qualifying for the loan or even their ideal interest rate. Any violation of the following guidelines can have unwanted consequences. Even after getting approved your loan will be reviewed by an underwriter and various parties will be verifying your employment, bank statements, and monitoring credit. Follow these guidelines until you close. Even the day before and/or the morning of closing, the lending institutions will be monitoring for any changes.
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1. Don’t change jobs, become self-employed, or quit a job. The lending institutions are loaning money based on your income and looking to see that your income is steady.
2. Do not finance a car. Any additional loan effects your debt to income ratio. It can immediately cause you to qualify for less home or worse...no home at all.
3. Don’t use credit cards excessively or let current accounts fall behind. This goes without explaining. Banks simply don’t want to loan $150,000+ to a person who is falling behind on a smaller loan such as $2,000 credit card balance. So stay on top of bills.
4. Do not leave out debts or liabilities from loan applications. Your debts and financial liabilities will surface one way or another. Prior to closing on a home, you’ll pay for inspections and a home appraisal. You don’t want to spend $600, then get caught omitting required info before closing and being out of money. It can disqualify you from the loan or lessen your amount, making you have to restart the process.
5. Do not spend money set aside for closing. You can’t close on a home if you spend the money you owe.
6. Do not buy furniture. The main thing is avoiding additional financing affecting your debt to income ratio. Also, you want to keep a steady bank account. Banks won’t like to see cash running from your account prior to lending you a large quantity of money.
7. Do not originate inquiries into your credit. Inquiries take a toll on your credit score. You need maintain your score to maintain your rate and qualify for the home....period.
8. Do not make large deposits without checking with your loan officers. This is simply suspicious and raises red flags.
9. Do not change bank accounts. Again, this reflects on consistency.
10. Do not co-sign on a loan. Co-signing on a loan for someone else reflects on your debt to income ratio as well. You don’t the more money you “owe” of are liable for, the less money you can qualify for.
Getting a house is a rewarding experience. Follow these simple guidelines and you should find the home buying experience much smoother.
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