Financial Mistakes To Avoid When Buying A Home

Working with many clients over the years, I have learned that often a list of what to do is provided to home buyers; but rarely a highlight of what to stay away from.  Here, I want to share with you the things to look out for as you embark on your new home purchase.

Before you start to look for that new home, here are 5 things to avoid:

  1. Your credit score, bankruptcy & late payments directly impacts your ability to get a home loan; the type of loan & the interest rate. Several months before beginning that search, re-establish credit by lowering credit card balances to below 30%, correct any errors reported & avoid constantly running your credit to see your score.
  2. Debt counts for 35% of your credit score, be sure to avoid late payments or being put into collections.
  3. Do not go on “shopping sprees” with cash or credit cards. Large “cash” purchases or withdrawals may cause red flags on bank statements.
  4. Job income over a 2 year period will have a huge impact on your ability to qualify for a home loan, avoid any job changes during the home buying process.
  5. Stick within your price range even if you are qualified for a higher amount, you know better than anybody whether you can afford the monthly payment.

After your pre approval, avoid these actions:

  • Avoid new debt: making new purchases that can change your debt to income ratio.
  • Opening a new line of credit might lower your credit score.
  • Closing your credit cards/accounts can harm your credit score that helped you establish your credit history.
  • Do not change jobs during the application. It might delay your process for 30 days

Related home buying tips from around the web

  • 12 First-Time Home Buyer Mistakes and How to Avoid Them from NerdWallet.
  • Top House Hunting Mistake by Investopidia.
  • The 13 biggest mistakes people make when buying a home, according to real-estate agents by Business Insider.

More home buying tips can be found here. Getting ready to buy a home? Feel free to contact me today!

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