I get asked all the time, “What should I do if I want to buy a home?” There are several things but probably most importantly, you should be asking, “What should I NOT do if I want to buy a home?”
The escrow process requires a good amount of coordination and diligence. Your team (myself, your lender, title) all work together to try and avoid any hiccups. Purchasing a new vehicle days before the closing on your new house is considered a very, very, big hiccup.
If you are prepared and informed ahead of time it can make the a world of difference. We’re talking a bumpy road transaction vs. smooth transaction. These are the most common mistakes buyer’s make prior to purchasing a home. Avoid these to ensure your transaction goes smoothly!
No Major Purchases Allowed
Please, don’t make a major purchase like new furniture, cars, appliances, electronic equipment, jewelry, or vacations until after the closing. Financing large purchases with a credit card could bring your credit score down and until you’ve got the keys, that house isn’t yours. Using cash to purchase high-ticket items can also create a problem, because many banks take your cash reserves into consideration when approving your mortgage.
Don’t Change Jobs!
Unless you’re paying cash, try not to make a major job change mid-transaction. Lenders like to see a consistent job history. Generally, changing jobs will not affect your ability to qualify for a mortgage loan if you’ll be making more money. However, lenders usually look for stability. Changing jobs during the loan approval process could raise some concern and affect the chances for loan approval.
Leave Money Where It Is
As your lender reviews your loan package, they will ask you to provide bank statements for the last two or three months on your checking accounts, savings accounts, money market funds and other liquid assets. To eliminate potential fraud, most loans (with the exception of some non-conforming loans) require a thorough paper trail to document the source of all funds. Changing banks or transferring money to another account could make it difficult for the lender to document your funds.
Listen To Your Lender
Even if you have been pre-approved for the loan, your lender will still need copies of your bank statements, w2s and other paperwork. It is up to you to provide all necessary documentation as soon as possible. Failure to submit certain qualifying documents could cause you to lose your loan and the financing you need to buy your home.
I hope these tips are helpful. Call me if you have any questions, or if you’re ready to start searching for your new home!
I like your tip to not make any financial changes but to do what you can to be and appear financially stable. I’m getting married in a month and hope to buy a home by the end of the year. I’ll make sure to save up enough money for the down payment and to keep my credit score up.