TOP 10 THINGS
NOT TO DO WHEN
BUYING A HOME

Don’t make large check or cash deposits into your band accounts.

Lenders like your down payment to be sitting in your account for at least 2 months-what they call “seasoning.” All cash deposits or large deposits not from your payroll are required to be documented and sourced.

Don’t change your job before submitting a loan inquiry for a home loan.

Quitting your job, changing your job, or becoming self-employed can cause issues with your loan. Lenders want to see a pattern of stability, which means you’ll be less likely to default on a loan. Changing jobs from self-employed to salaried or salaried to salaried is OK. However, going from salaried to self-employed is problematic because you will not be able to provide documented taxable income to prove your earnings.

Don’t change banks.

Like your employment, you want your banking history to show stability.

Don’t buy a car, truck, or any other form of transportation that you have to finance.

Buying a vehicle increases your debt-to-income ratio, and that’s something lenders don’t want to see.

Don’t buy furniture on credit before buying your house.

Like financing a car, charging big-ticket items increases your debt-to-income ratio and can adversely affect your mortgage.

Don’t be late on your credit card payments or charge excessively.

You need a track record of responsibility that shows you consistently handle your money well. Late payments can also adversely affect your credit score.

Don’t fib on a loan application.

Don’t leave out any debts, liabilities, or fudge your income. It’s fraud.

Don’t co-sign a loan for anyone.

Even if you’re not the one making the payments on the loan, it increases your debt-to-income ratio.

Don’t have inquiries made into your credit.

Looking for new credit translates into higher risk for lenders. Opening additional credit accounts within a short period can cause your credit to take a hit. While probably not a huge factor in calculating your ability to repay a loan, it’s not worth the risk.

Don’t overlook closing costs.

Part of the price of financing a loan is the closing costs, and you’ll likely have some responsibility for paying them. Make sure you have enough for your share of the obligation.