Most buyers know they need to save for both a down payment and closing cost money.
Buyers also need to pay down their debt to be sure their debt-to-income ratios are under the various thresholds for USDA, FHA and conventional loans. And, of course, buyers need to talk to a mortgage broker before looking at homes so they know they are in a position to purchase and how much they can afford.
But even after buyers receive their pre-qualification and enter into a contract of sale to purchase a home, there are certain things to avoid financially when getting ready to buy a home or are already under contract to buy a home.
Donna Allenbaugh, Mortgage Banker with The Federal Savings Bank, and a local lender, offers these tips for things to avoid:
- Don’t Change Jobs: Changing jobs before or during the loan process can create a problem in qualifying you for a loan, particularly if that job is in a different line of work or at a lower rate of pay than your current job. Many loan programs require you to have a two-year work history.
- Don’t Switch Banks: It is best to leave your money where it is until your loan has closed. Moving your money to a new bank or even into a new account can wreak havoc with the verification process. Most new accounts opened or large deposits made in the last six months will have to be explained as to the source of the funds.
- Avoid Big Purchases: Do not buy ANYTHING until you walk away from the settlement table. Do not apply for ANY new credit until you walk away from the settlement table.
- Avoid Credit Inquiries: Your credit score will be affected if your credit is run many times in a short period of time. Since interest rates and good credit scores are directly linked, it is in your best interest to minimize the number of times your credit is pulled.
Lauren Bunting is a Broker with Keller Williams Realty of Delmarva in Ocean City, Maryland.
