The super-big “not to do” before purchasing your home!

Buying a home is not an impulse purchase; you will have a few months planning before you actually go through with the “buy”, in most cases.

These are the “big not to dos:”

1. Do not spread your wealth around; buy new stock, invest in a new money market account, open a new checking or savings account.
2. Do not plan the money draining big Wedding. 
3. Do not take the European trip or the two week cruise.
4. Please do not buy automobiles, furniture, appliances, or electronics.  These purchases can all wait until you are in your new home.
5. Do not change jobs. Sometimes, you cannot help a change, such as getting laid off or fired. If that happens, it would be wise to delay your home purchase for at least six months after you find a new position. Remember, longevity in employment is an important factor in getting financing approved.
6. Become Self-Employed or change jobs from full time to part-time. Either of these could have a negative affect on your mortgage approval.  Self employment creates an issue because lenders want to see at least two years of self-employment before they will approve you for a loan. Wait until after buying a home to become self-employed.
7. Do not switch careers, along with longevity in a job comes stability of the job history.  If you change your job, then make sure it is in the same field you have always worked on (for example: healthcare, sales, management, restaurant and beverage, entertainment, etcetera).
8. Apply 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.

Here is the recap, purchasing something major ahead of time limits your purchasing power, the amount of credit available to you and lessens your income to debt ratio.

Also, when a lender reviews your loan package for approval, one of the things they are concerned about is the source of funds for your down payment and closing costs. Most likely, you will be asked to provide statements for the last two or three months on any of your liquid assets. This includes checking accounts, savings accounts, money market funds, certificates of deposit, stock statements, mutual funds, and even your company 401K and retirement accounts.

If you have been moving money between accounts during that time, there may be large deposits and withdrawals in some of them.

The mortgage underwriter (the person who actually approves your loan) will probably require a complete paper trail of all the withdrawals and deposits. You may be required to produce cancelled checks, deposit receipts, and other seemingly inconsequential data, which could get quite tedious.

Relax, take your time, dream slowly, then after your home purchase resume life as usual.

Baytown Real Estate