This is a list of do’s and don’ts when you are planning to buy a new home or refinancing your current home. The reason why do’s and don’ts are important to review is that some of your current everyday activities can hinder or prevent you from buying a home or even make you ineligible to purchase of finance a home. Please review this list of items and keep them in mind during the home buying process. We want you to have the best possible experience during this process.
- Do- Get a PREAPPROVAL instead of a PREQUALIFICATION. The preapproval process includes an in-depth look at your income, assets, and credit instead of the surface view of these important qualification features.
- Do- Keep the lender up to date on all of your personal support documents. This includes paystubs, W2 forms, personal tax returns, bank statements and retirement statements.
- Do- Avoid credit inquiries. To stay on the safe side assume every inquiry counts as a hard pull and will impact your credit score as well as your loan qualifications. This includes cosigning on loans and consolidating credit cards. We have to pull credit to requalify you about every 120 days. During this time we can advise you what improvements to make and what to avoid.
- Do- Use a written budget and outline a savings plan. On loans, the more that you put down and the less debt you have the more attractive the loan offer.
- Do- Pay all of your bills on time. Lenders will pull another credit report the day of closing to assure that you did not open any debts that they did not know about.
- Do- Consult with your lender as to whether to pay down debts. We can use score simulators to show you what impact it would have.
- Do- Keep your lender and Realtor abreast of any major life changes. We usually can deal with it if we know about it.
- Do- Let your loan officer know if you plan to use gift funds from a family member. Funds are not able to be borrowed and require sourcing.
- Don’t- Cosign or open any lines of credit, increase current credit lines or move money from one card to another.
- Don’t- Consolidate any loans. This includes car, student and consumer debt
- Don’t- Attend any Timeshare Presentations. The free gift is not worth it and timeshares are often felt by those who own them as a waste of money.
- Don’t- Change Jobs. A natural promotion is ok but you do not want to change employers or pay structure.
- Don’t- Move money around or acquire any NSF charges on your bank account.
- Don’t- Skip, miss or overlook any of your monthly debt payments to credit cards, transfer balances, apply for any new cards or close any old cards. It will impact your credit score.
- Don’t- Listen to people who do not have a professional license or are not directly part of this transaction. They will suffer no repercussions of their advice harms you.
- Don’t- Make any major purchases. Do not buy anything until you own the home and the mortgage is closed. The items will be on sale again or another vendor may have it for less after you own the home.
- Don’t- Overextend yourself when buying a home. It should be a well thought out and calculated plan to assure you can afford it.