What NOT Before You Plan to Buy a Home

Buying a home in SW Florida for the first time is one of the biggest decisions you’ll ever make in your life – one of the biggest investments of your life. Many first-time homebuyers are surprised to discover the many roadblocks on the way to homeownership. Not to mention, the way you can mess up your chances of being approved for a home purchase. To avoid messing up the transaction, you have to be extremely careful until the deal is done.

Making mistakes is easy when you have never bought a home before. Many of these items are mortgage mistakes and easy to avoid. Use the following tips to protect your home purchase. These eight tips will help you make the right home buying decisions.

1- DON’T MISS ANY BILL PAYMENTS

Many buyers believe that once a lender issues their loan commitment, they are good-to-go but this is not the case! The lender will look at your credit several times throughout the whole process. You must keep all your bills current as well as loan payments, credit cards, etc. If you have any missed payments, it could lead to you losing the loan.

Lenders have the power to revoke a loan commitment and will do so if they see fit. Anything that will get flagged on your credit report will not do you any favors so make sure all your bills are paid on time!

2- AVOID CHANGES IN JOBS DURING THIS TIME

It shouldn’t come as a surprise that lenders will look closely at your employment history. It goes without saying that they want to make sure that you are financially stable and capable of making your loan payments. You will want to avoid changing jobs until your loan is closed. Changing situations could cause the lender to think you won’t have a steady income to keep up with a mortgage. Stability is key!

3- DON’T LIE OR STRETCH THE TRUTH ON YOUR LOAN INQUIRY

You may have no intention of lying or embellishing about your finances when you fill out your loan application, but it’s important that we mention it. Lying on any loan application is considered fraud and if the lender finds out you lied, you will almost certainly lose your loan. Even if you slightly stretch the truth or make an honest mistake, it can cause significant problems when the truth is discovered so be extremely careful that all the information you put down is true and accurate. Falsifying information is a big no-no when applying for a mortgage and will put you in a horrible spot!

4- CONSOLIDATING YOUR DEBT? BE VERY CAREFUL.

It might make sense to consolidate your debt before buying a home. Most debt consolidation offers make it possible to bring all your debt under one umbrella so you’re paying just one payment instead of a dozen. Tempting right? But there are often many hidden fees and crazy high interest rates and may not improve your credit the way you expect so you may not want to do this when applying for a home loan.

5- DON’T APPLY FOR ANY OTHER LOANS

You don’t want to apply for anything that will require them to make a credit inquiry during the entire home buying process. As we mentioned earlier, the lender will review your credit several times during the process and if they see other credit inquiries, it will look like you are trying to acquire more debt.

Although one or two minor inquiries may not be enough to lose your loan, why take unnecessary risks when you are so close to getting your loan?

6- AVOID PURCHASING A CAR

Buying a car while also trying to purchase a new home is without a doubt one mistake you must avoid making. Purchasing a car is another large expense you are committing to paying and your original loan pre-approval was based on the state of your debt load before you purchased the car. This can throw a huge wrench into your home buying plans. Adding the debt from a new car purchase might make it so you are unable to get the home loan.

7- DON’T CHANGE BANKING INSTITUTIONS

Your current bank may have annoyed you or made you upset. Maybe you saw a great offer from a different bank for new customers that’s too good to pass up. But during the loan process, you must pass it up because changing banks could derail everything. Just like your employment and finances, your banking history is also a big part of the equation in the approval process. If you want to change banks, we suggest waiting until your loan closes.

8- AVOID BEING A CO-SIGNER FOR ANYONE ELSE

You may think that co-signing is not the same as having the loan in your name but to lenders, it’s basically the same thing. You are financially obligating yourself regardless of whether you are the primary person on the loan or not. If the lender of the loan you co-signed for is unable to get payment from the primary owner, they will come looking for you to pay.

As with all other points listed above, you need to focus on keeping your credit and financial situation stable and consistent until your loan is finalized. No matter how much you want to help a family member or friend, don’t co-sign for anyone until your loan is closed.

FINAL THOUGHTS

As you can see, it’s easy to make mistakes when getting a mortgage – especially when you are a first-time home buyer. We hope that these tips are useful and help you from making financial blunders that might prevent you from getting a home loan. Let us know if you have any questions or need help finding your first home!