Buying a home is a thrilling journey, but it requires careful planning and financial discipline. To ensure a smooth process, here are 10 things you should avoid doing before purchasing a house.
1. Don’t Change Jobs
Stability is crucial. Avoid changing jobs, becoming self-employed, or quitting your job. Lenders prefer a consistent employment history, which reassures them of your ability to make regular mortgage payments.
2. Don’t Buy a Vehicle
Hold off on big purchases like a new car, truck, or van. These can increase your debt-to-income ratio and negatively affect your loan approval. Your dream home should take priority over a new ride.
3. Don’t Use Credit Cards Excessively
Keep your credit card usage in check. Excessive spending or falling behind on payments can lower your credit score, which is essential for securing favorable loan terms.
4. Don’t Spend Your Closing Money
The funds you’ve saved for closing costs should remain untouched. Using this money can lead to financial shortfalls when it’s time to finalize your purchase. Stay disciplined and ensure these funds are available when needed.
5. Don’t Omit Debts or Liabilities
Be transparent about your debts and liabilities. Omitting them from your loan application can lead to complications and even loan denial. Honesty ensures a smoother process.
6. Don’t Buy Furniture
Wait to purchase new furniture until after you’ve closed on your home. Avoiding unnecessary debt during this period is crucial for loan approval. Your new home will need a couch, but securing the home comes first.
7. Don’t Apply for New Credit
Refrain from applying for new credit cards or loans. Each inquiry can impact your credit score and raise concerns for lenders. Hold off on new credit applications until after your mortgage is secured.
8. Don’t Make Huge Deposits
Avoid making large deposits into your bank account without consulting your loan officer. Significant, unexplained deposits can raise red flags for lenders. Consistency in your bank account activity is important.
9. Don’t Change Bank Accounts
Stick with your current bank accounts. Changing accounts can disrupt your financial history, which lenders need to review. Keep your financial records stable and easily traceable.
10. Don’t Cosign for Anyone
Avoid cosigning for another person’s loan. This makes you financially responsible if they default and can affect your ability to qualify for your home loan. Protect your credit profile by steering clear of such commitments.
Following these guidelines will help maintain your financial stability and increase your chances of a smooth and successful home-buying process. Preparation and prudence pave the way to homeownership. Happy house hunting!