In the market to purchase a home this spring? Here’s what you should and shouldn’t do to ensure a smooth and happy home buying experience.
- Save recent pay stubs and financial statements
- Get all your financial paperwork in order before applying for a mortgage. This will provide a seamless application process.
- Get pre-approved
- During this step in the home buying process, you’ll discover how much house you can afford and move your mortgage process along faster.
- Continue to pay debts and bills on time
- Maintaining a good credit score is important. Stay on top of debt and pay all your bills on time. A FICO score can impact the rate you receive on a loan, the quantity of loan you qualify and the price of your private mortgage insurance.
- Keep copies of every document you submit to your loan officer
- All documentation needed to process your mortgage is critical and you should keep a copy of each document to make your life easier in case you ever refinance or the loan officer (LO) needs additional information.
- Check your credit report and expect a final credit check before you close
- Being aware of your credit situation is important when purchasing a home and your LO will have to run a credit report during the mortgage process.
- Contact your LO if you have any questions or need assistance.
- Do not be afraid to reach out to your LO with any questions or concerns you may have throughout the process, that’s what they’re there for!
- Make any large purchases using credit
- Do not make any major purchases until after you have closed on a house. This could affect your credit score or your debt-to-income (DTI) ratio, which will impact and possibly delay your loan application process.
- Co-sign on any loans
- Again, you do not want to do anything to delay or negatively impact your loan process -- co-signing on a loan could affect your DTI or your credit score. Wait until you’ve closed on your new home before co-signing on any new loans.
- Apply for new credit cards or loans
- Signing up for a new credit card while shopping for a new home may put you at risk for mortgage denial or higher interest rate.
- Change jobs
- Your employment history and income are extremely important when getting approved for a loan because they provide insight into your ability to make the payments. Avoid changing jobs when applying for a loan.
- Make large cash deposits in your accounts
- During the application process, the underwriter must verify all information provided about your income, credit and ability to repay the loan. A substantial cash deposit in one of your banking accounts could jeopardize the application process or raise red flags if you can’t explain the source of the money.
At the end of the day, prospective home buyers should treat this period as “quiet time” for finances. Avoid significant changes in debt, employment or residence that affect your credit, as it could impact the terms of your loan or ability to qualify for a mortgage.