There is so much to take in when you are buying a home, the list of ‘to do’ seems to go on forever. After your meeting with your lender, you feel like you might have it all under your belt. You’ll know your loan options, down payment, interest rate, and a list of docs that the lender needs.
However, there’s also a list of ‘DON’T DO’s,’ that can screw up your loan that you might forget.
Don’t Deposit a chunk of cash in your bank account. Underwriters will want to know where it came from, why, who gave it to you and do you have proof of what it was. Let’s say that your grandma wants to help you out with your first home and gives you a few thousand dollars for the down payment. You are surprised, delighted, and rush to drop it into your account. It’s all good, right? Underwriting will want a copy of the cancelled check and a copy of grandma’s bank account showing the withdrawal. If your grandma is like most grandma’s she protects her bank account with a shotgun. Hold the checks of anything you sold on EBay or Crag’s List until closing, No cash deposits, no unusual check deposits without keeping a copy and the source.
Don’t close out credit cards. Your credit isn’t just about what you owe. It is about how trustworthy you’ve been for how long. Cancelling cards can lower your credit score. You want to keep them open, but not use more than 30% of your line of credit and continue to make at least minimum payments on time.
Don’t Change jobs without telling your lender! If you lose your job, you better find it quick, or you don’t qualify. If you are offered the dream job, talk to your lender about a timeline strategy. Your lender will need to verify employment when you apply, and again before closing.
Don’t quit your job to start your own business. No, just don’t even think about it until the loan is closed. If you are self-employed you’ll need a 2-year financial history, 2 years of taxes in the business name, and profit and loss to date to qualify.
Don’t agree to pay off an old collection. If the collection has to be paid, make a lump payment at closing, but don’t make an agreement to pay installments. Every payment is tracked as a late payment. Every late payment lowers your credit score.
Don’t Buy a car, or any other large purchase that will add to your debt. Your loan is based on your income minus debt = how much you have to spend on your mortgage. Depending on the loan, even a few points change your ratios.
Don’t leave the country on an extended vacation where you have no internet access. Your loan isn’t plug and play. It needs you to make it happen, please don’t disappear.
If you’re in doubt about your next move, just give me a call or shoot me an email.