When home buying, your credit is still under the microscope – even more so than before! Yes, the bank has approved you for a mortgage but they haven’t given it to you yet and they don’t have to either. Being approved is not a guarantee to get a home loan. Believe it or not, the bank is not legally obligated to give you that loan. You still have hoops to jump through and if you miss, you won’t be buying a home this time around.
Here are some things that are especially dangerous and may keep you from buying a house:
Do not do these things:
1. Change jobs
The bank will call your employer just hours before they send the loan money to the escrow company to confirm that you still work there. If you don’t work there anymore, they’re not going to give you the loan money without a good explanation!
2. Move money from account to account
Don’t open new accounts of any kind and don’t move money around. If you do, you’re going to have to give the bank the reason – in writing – which will cause delays, especially if you don’t respond quickly.
3. Open new accounts
You were approved based on your credit at the time you filled out the loan application. If there are changes, it’s going to change your credit score.
4. Close any accounts
Closing accounts is actually the same as opening them. It will change your credit score – and not necessarily in a good way. Having credit proves that you are responsible enough to manage money. If you close an account you might erase that record of good repayment history.
5. Co-sign on a loan
Co-signing on a loan makes you responsible for the payment – yes, even though you are only the co-signer. That changes the amount of money you owe, making your debt to income ratio higher. In other words, buyers are approved for a home mortgage based on how much income you have compared to how much debt you owe. If your debt goes up but your income doesn’t, you just wrecked your ratios.
6. Don’t buy anything
There are a variety of reasons to have your credit pulled. Just don’t do it.
Don’t buy a car – or lease a car – boat, furniture or jewelry.
7. Don’t move
You’re moving soon anyway so I don’t know why you would move during escrow but talk to your realtor and your mortgage person before you do it.
8. Don’t get a divorce
When home buying, your spouse – maybe soon to be ex – must sign an ownership waiver. Filing for divorce will confuse the whole situation. Just wait a little longer.
9. Don’t be late on any payments
Car loans, credit cards, rent, current mortgage – all must be paid on time!
And here are three tips to keep you in good graces with your favorite realtor and home mortgage lender:
1. Copies of bank statements, check stubs, tax returns
While you’re looking at homes, keep stacking up those statements. The mortgage lender is going to want updated copies, you’ll be ready and won’t have to go hunting around for them.
2. Bank deposits
Keep receipts for your deposits.
Do not make any unusual deposits. If family gives you money for your home purchase – or you get a raise or bonus – don’t deposit it without talking to your mortgage officer. The mortgage company is going to want to know where all the money you deposit comes from.
3. Stay in touch
If you’re planning to go on vacation or a work trip at any time during your home buying process, let your realtor and your mortgage person know. There are a lot of decisions to be made and documents to sign. We have to know where you are at all times – ok, just kidding. But, really, be responsive!
Are you thinking of home buying in Northern California? If you haven’t hired a top producing Northern California real estate agent yet, contact me, and I’d be happy to discuss the real estate market history and the current state of the local market!
About the author: The above article “Home Buying Do’s and Don’ts” was provided by Vicki Moore of eXp Realty California. With over 20 years of experience, if you’re thinking of selling or buying, we’d love to share our knowledge and expertise. We service the following Northern California areas: Roseville, Rocklin, Granite Bay, San Mateo, Foster City, Pacifica, Burlingame, San Carlos, Belmont, Redwood City.
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