5 Don'ts Before Buying A Home
Just because you’re buying a home doesn’t mean that life has to stop, or does it? Here are some suggestions you should avoid doing before buying a home.
Purchase a Car. Purchasing the car before buying a home will have an effect on what the mortgage lender determines you can afford for a home. Since a car is such a big-ticket item, it can greatly raise your debt-to-income ratio, which lenders use to determine how much of a mortgage you can afford.
Move Money Between Accounts and Change Banks. When the lender does the work to determine your eligibility for a loan, they will request statements from all of your accounts that contain liquid assets. The lender will request the documentation for these. Unless you want to keep up with all this paperwork, it’s much easier to leave the money where it is and stay with your current bank until after you have completed buying a home.
Become Self-Employed or change jobs if you are employed part-time. Either of these could have a negative affect on your mortgage approval. In most cases, 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.
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.
Make a Large Purchase. Resist the urge to purchase new furniture set until after you have obtained the mortgage.
In summary, when you are buying a home, it is best to stay away from anything that will make it look as though you don’t have your finances under control.