Five Mistakes To Avoid
Between Pre-approval And Closing
Real estate agents often advise their clients to go through the loan pre-approval process before they even begin to look for a new home. For most, going through the pre-approval process is well worth it. Once you are preapproved for a loan, you know how much a lender is willing to loan towards the purchase of your new home and that keeps you from wasting time looking at homes you simply cannot afford.
But a pre-approval letter – even with a contract — is not final approval. Unfortunately, inexperienced homebuyers often make the mistake of assuming that final approval of their loan is guaranteed, and make mistakes that could delay or prevent their loan being approved.
Here are five common mistakes you need to avoid while waiting to close on your home.
Taking on New Debt
If you are waiting to close on your new home, don’t finance items for your new home like a living room suit, lawnmower or washing machine, and it goes without saying that you should avoid financing any major purchases like a new car or boat.
In fact, even minor expenses can be problematic if there are too many charges to your credit cards, but, on the other hand, you do not want to stop using your credit cards altogether.
The key is to keep everything consistent. Try to not deviate too far from the spending patterns you established in the months leading up to your preapproval.
Moving Large Amounts of Money
Lenders like things to be nice and stable as far as your finances are concerned, and that includes your bank accounts. Lenders will review your bank statements during underwriting. Large deposits or withdrawals will send up a red flag and could delay the approval process. This can be disastrous if you are attempting a simultaneous closing.
If you want to play it safe, let your down payment funds “age” for at least 90 days in your bank account. If you plan to use a gift or the proceeds from the sale of an item such as boat or car, make sure you have the paperwork to back up the sudden windfall.
Forgetting to Pay Your Bills on Time
There’s a lot going on when you are planning a move, and it’s easy to let things – like the bills – slip through the cracks. Make sure to keep track of your bills even as you pack away all your belongings. If you are moving to temporary housing while you continue to look for a new home, make sure to contact all your providers and verify all your bills are current and make them aware of your new address in the event there are any problems.
One way to avoid missing an important payment and taking a negative hit to your credit is by setting up online, automatic bill pay through your bank or with each provider individually.
Co-Signing for Anything
Some would say you should never cosign a loan. That’s debatable, but you should nevercosign a loan while you are in the process of buying a home. Even if you are never required to make a payment, lenders will consider this new debt when calculating your debt-to-income ratio, and may be forced to reconsider approving your home loan.
Lenders love stability. If you are in the process of buying a home, you do not want to change jobs. You do not even want to change the way your pay is structured – say from salary to commission based. Remember, it’s only for a few months. After you close on your new home, you can change jobs that afternoon, just not before.
If you must change jobs, for example you are offered a dream job at twice your current salary and they need an answer by the end of the week, call your loan officer and let him know your situation. Keep him in the loop. A loan officer that knows your situation is much more likely to let some things slide than one who is surprised a week before closing. Learn more…
Count On Chris!
Chris’s knowledge and experience, as well as her negotiating skills, have been instrumental in formulating the talents and beliefs of The CHRIS WYLIE TEAM. Chris takes great pride in being someone others can count on to be there. Keeping the clients’ needs at the forefront of the buying/selling process is the mind-set Chris used developing The CHRIS WYLIE TEAM into a diversified, reliable, well qualified organization, capable of productively marketing, effectively negotiating, selling, buying, and efficiently closing real estate transactions.
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