Just because you’re buying a home doesn’t mean your life has to be put on hold…or does it? You never know what affect today’s actions will have on your mortgage application in three or even six months. Even something as simple as transferring money from your savings to your checking account can create a hassle in the mortgage process. So here are some suggestions of things you should avoid before buying a home:
1) Purchasing a Car
For whatever reason, many people are inclined to purchase a car and buy a home at the same time. Overall there’s nothing wrong with that. However, purchasing the car before buying a home will effect what the mortgage lender determines you can afford as it can greatly raise your debt-to-income ratio.
2) Moving Money Between Accounts
When the lender is determining your eligibility for a loan, they will request statements from all of your accounts that contain liquid assets. When you move money around between these amounts, especially if they are large amounts, you will have withdrawals in some and deposits in others. The lender will request the documentation for these. So unless you want to keep up with all this paperwork, it’s much easier to leave the money where it is until after you have closed on the home.
3) Changing Banks
This can easily be coupled with moving money between accounts. It just creates additional paperwork for you and the lender. So to make it easier on both yourself and the lender, stay with your current bank until the mortgage is complete.
4) Becoming Self-Employed or Changing Part-time Jobs
In most cases, lenders want to see at least two years of self-employment before they will approve you for a loan. So if you can, wait until after buying a home to become self-employed. For part-time workers, changing jobs creates unpredictability in the number of hours you will work so the lender cannot determine your gross income to qualify you for a loan.
5) Applying For a Credit Card
Even though the inquiry won’t hurt your credit too badly if you already have a good credit score, the additional credit card will cause the lender to question your financial stability for buying a home.
6) Making a Large Purchase
Of course you are going to need furniture when buying a home. However, resist the urge to purchase that new sofa set until after you have obtained the mortgage. Big-ticket items purchased before buying a home can cause the lender to take a second look at your financial situation.