Buying a new home hinges on several key factors falling into place: finding the right property, negotiating a contract, and securing the financing. Many homebuyers successfully navigate all the criteria — only to make some critical mistakes prior to closing the deal that can jeopardize their homeownership dreams. There are a few “don’ts” to remember when buying a home.
Here are a few don’ts to remember when buying your new home:
01. Don’t apply for new credit of any kind or co-sign on another person’s loan – This will affect your credit and debt to income depending on the type of loan. Even if you have agreed to not be responsible for those payments with your co-signer, the lender will see it as debt.
02. Don’t make large deposits into your bank account – Your down payment should be seasoned (sitting in your account for at least two months). If you do need to make a deposit, ask your lender first.
03. Don’t charge a lot on your credit cards – Your credit will be checked again right before closing. If you owe more than what’s allowed for the loans debt-to-income ratio, you may not longer qualify for the loan.
If you owe more than what’s allowed for the loans debt-to-income ratio, you may not longer qualify for the loan
04. Don’t buy a new car – This will affect your monthly debt. Also, do not pay off a car. If you close this account, it could lower your credit score. Credit diversity is important.
05. Don’t spend your down payment – You’ll need this money at closing, so make sure you keep it in a place (like a savings account) where you won’t spend it. Make sure to budget for this before starting the home buying process.
06. Don’t buy furniture yet – Don’t make big purchases while in the loan process. Especially on credit. There’s nothing worse than a room full of furniture and no room to put it in.
07. Don’t quit your job or change jobs that could affect your employment or income – The lender will check your employment the day before or day of closing. It is important you have the same job as what they qualified you with.
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