Buyers Beware!
There are a few things when getting ready to purchase a home that you need to avoid. Below is an outline of a few things to keep in mind before applying for financing and during the contract period.
- Don’t make any expensive purchases until after you are in your home. You may be tempted to buy that perfect sofa for the family room you saw go on sale, or get that new hybrid because gas is just getting so expensive…but please don’t! Financing that new furniture, maxing out your credit cards, new credit inquiries or depleting your cash reserves can do a number on the loan approval process (not to mention your credit score). Don’t jeopardize your chances of getting into the perfect home before you even begin. See my section on building your credit score for tips on how to get the best interest rates.
- Don’t change jobs (or at least your line of work). This isn’t always true for everyone, but banks typically don’t like to see borrowers that jump from job to job. It makes you a more “at risk” borrower and this too can jeopardize your chances of getting into your dream home. If you are switching to a higher paying job in the same line of work, go for it, but for some, job jumping can throw up a red flag and make getting into your dream home that much more difficult.
- Do not give a deposit on a house directly to the seller. Your deposit belongs to you until the deal is closed. Any deposit you make should be credited back to you in the closing statement so make sure your binder deposit is held in escrow with an attorney or title company if you aren’t working with a real estate agent, or with a real estate company.
- Don’t pay off collections right before you go to apply for a loan as it takes one, possibly two billing cycles before it will improve your credit score. Did you know that your score typically drops right after you pay off a collection? Give it time to adjust before you reap the benefits of a higher credit score!
- MOST importantly, don’t drag your feet in getting all of your required loan documents to your broker or loan officer. Hours, not days are important when submitting a loan. Failure to do so can cost you thousands of dollars because you might end up with a higher interest rate or worse…it can cost you your new home!
