What Not To Do Before Purchasing A Home
Buying a home is a huge undertaking. There are many people that dive into the process headfirst without first stopping to make sure that everything is in order. Buying a home is one of those things that’s great when everything goes according to plan, but can be detrimental with even the slightest slip up. There are some things that you should never do before purchasing a home. These are the things that can hurt your chances of getting a mortgage or affect your ability to pay the mortgage even if you are approved.
One of the first things that should never be done before a home purchase is the purchase of an automobile. For many people these two things go hand in hand. The notion is that once you have a car and a house that you have arrived. While there may be some element of truth to this notion, it is extremely difficult to purchase both at the same time. Having an auto payment at the same time as a house payment creates financial strain. Worst case scenario, this financial strain could lead to a repossession of the car or the house or both.
Some lenders will not approve you for a mortgage if you have recently made a major purchase such as an automobile. Too often they have seen people lose their homes because of the financial strain that two large payments can create. This also goes for other major purchases including furniture, vacations, weddings, and appliances.
You should avoid changing jobs at least six months prior to applying for a loan. There are a few exceptions to the rule. If you are a salaried or hourly employee and will be making more money at your new job, it will not affect your ability to get a loan in most cases. In fact, lenders look favorably at an increase in income. If your income is made from commissions or bonuses or you work part-time, you should not change jobs before applying for a mortgage. Also, if you are considering becoming self-employed you should only do this after you buy the home.
Before you apply for a mortgage, you should not apply for or open any new credit card accounts. In fact, you should avoid incurring any new debt for at least six months before you apply for a mortgage. When you take on new debt, it gives the lender reason to question your ability to afford the mortgage payments. The higher your debt load, the less likely a lender will approve you for a mortgage. Avoid using your credit cards to pay for items while you are getting ready to apply for a mortgage.
When you apply for a mortgage, the lender will take a look at statements for your liquid assets for at least the last three months. In this time period, you should make sure that you don’t make any large transfers of money between the accounts during this period of time. The lender will ask you to produce various documents that show transfers of money. Since this process can become tedious, it is best not to make transfers.
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