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:
- 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.
- Debt counts for 35% of your credit score, be sure to avoid late payments or being put into collections.
- Do not go on “shopping sprees” with cash or credit cards. Large “cash” purchases or withdrawals may cause red flags on bank statements.
- 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.
- 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.