As you move through the home buying process, there are many things you should keep in mind. Here are the Top Ten financial pitfalls you should avoid when purchasing a house.
#1) Do not change jobs.
Change in your job status will cause your file to be re-underwritten and reconsidered. This may cause a delay with your loan process or possible denial of your loan application.
#2) Do not co-sign a loan for anyone.
During the loan process, changes to your credit report or status could negatively affect your ability to close your loan on time or at all.
#3) Do not buy a vehicle.
Applying for credit to purchase a vehicle will be recorded as an inquiry into your credit. This may decrease your credit score or decrease the amount of money that you may qualify for when purchasing a home.
#4) Do not use charge cards excessively or make late payments on ANY of your accounts.
Excessive use of credit cards can have negative effects on your credit rating. Inquiries are recorded by credit bureaus and balances on credit cards exceeding 35% both affect your debt to income ratio and decrease your credit score. Also, late payments of any type can decrease your credit score, increase your home loan interest rate, delay loan closing, or cause loan denial.
#5) Do not spend money you have set aside for closing.
Most conventional loans require 2 months of reserve money to be verified in your available financial accounts. Once it has been verified for use at closing, spending these reserve funds may result in loan closing delays or loan denial.
#6) Do not omit debts or liabilities from your loan application.
Please be honest and clear about ALL of your debts or liabilities early in the loan application process. Having the right information will allow your Loan Originator to provide you the best qualifying loan value. Unrecorded debts or liabilities that are found later in the process may affect the amount of money you qualify for in addition to causing delays or denials of your home loan.
#7) Do not buy furniture, appliances, or household items before closing.
Large purchases causing deductions in your banking accounts or additional debt on credit cards can negatively affect your loan process resulting in delays or denials.
#8) Do not originate any inquiries into your credit.
Multiple inquiries into your credit may decrease your credit score and any credit checks could negatively affect your ability to qualify for a home loan.
#9) Do not make large deposits without first checking with your loan originator.
Abnormal deposits or large deposits into checking, savings, or any financial account beyond normal payroll deposits must have money sources verified by Underwriting. Making these deposits could result in loan processing delays or denials.
#10) Do not change bank accounts.
Because the loan process requires a 2-month history of reserve funds, opening new financial accounts near a closing date may void this history. New bank accounts will not have the 2-month history available and cannot be used. This may result in loan closing delays or denials.