What Not To Do When Purchasing A Home: Financial Edition
It’s so so so important to make sure that while you’re in the process of looking for a home or under contract on a home to 𝗻𝗼𝘁 make these financial decisions as they could affect your approval, underwriting and home purchase.
It’s the worst when we have to break the news that a loan couldn’t be approved because of a mistake during the timeline of a home purchase.
Scroll through these. Some you may know, some you may not. Any way, we hope you find it helpful and chalk it up as a simple, friendly reminder.
- DON'T MAKE MAJOR PURCHASES: Avoid making significant purchases, such as buying a car or expensive furniture, as they can strain your finances and impact your ability to afford mortgage payments.
- DON'T OPEN NEW LINES OF CREDIT: Opening new credit cards or taking on additional loans can increase your debt load and negatively affect your credit score, potentially impacting your mortgage approval and interest rates.
- DON'T NEGLECT YOUR CREDIT OBLIGATIONS: Ensure you pay all your bills on time and in full to maintain a healthy credit score. Late payments or defaulting on debts can harm your credit and affect your mortgage application.
- DON'T QUIT OR CHANGE YOUR JOB OR CAREER: Lenders prefer stability when evaluating mortgage applications. Changing jobs or careers during the homebuying process can introduce financial uncertainty and may raise concerns for lenders.
- DON'T DIP INTO YOUR SAVINGS: Avoid using your savings for non-essential expenses during this time. It's crucial to have sufficient funds for the down payment, closing costs, and unforeseen homeownership expenses.
- DON'T MAKE LARGE DEPOSITS: Making large deposits into your bank account during the home lending process can raise concerns for lenders and potentially complicate your mortgage approval. When you make a large deposit, the lender will scrutinize the source of those funds to verify that they are not borrowed money or undisclosed debts.
- DON'T CLOSE EXISTING CREDIT ACCOUNTS: Closing credit accounts may impact your credit utilization ratio, which is the amount of credit you're currently using compared to your total available credit. Closing accounts can lower your available credit, potentially raising your utilization ratio and negatively affecting your credit score.
- DON'T MAX OUT CREDIT CARDS: Aim to keep your credit card balances low and well below the credit limit.e currently using compared to your total available credit. Closing accounts can lower your available credit, potentially raising your utilization ratio and negatively affecting your credit score.