Word Count: 542 words (3 minutes to read) Many things
Buying a house can be one of the most stressful events in your life. You have legal contracts, bidding wars, money, and long-term commitments. And all of this under strict deadlines with serious consequences if something is missed. There is no doubt this can be stressful. By following the 5 items below, you should make the process run smoother and reduce some of the stress. Without further ado, here are the top 5 things not to when buying a house (in no particular order).
1) Don’t take on any new loans or credit card
As you are about to close on your mortgage, a new credit report is often pulled. And poof – new loans or credit cards appear that didn’t exist before. One of the most common things people do is take out loans for new furniture when they are about to close on their new house. It seems reasonable. You need new furniture to fill up the rooms in your new house. If you are close on your debt ratios, this logical need may put you over the edge and hurt your qualification.
Another common one is new cars. One of the Mortgage Bankers here are CityWorth phrased it perfectly “Don’t get a loan on the Mustang until you have closed on the garage!”.
Even co-signing on something can turn out to sting you. Don’t go co-signing for your sister’s Macy’s card to save 20% on a purchase two weeks before closing.
If you must have that new sofa or car, talk to your Mortgage Banker first to make sure you will still qualify.
2) Don’t quit your job
This actually happened. A borrower got laid off after getting into contract and decided that rather than telling us and getting a month of work under his belt on a new job to close later, it would be a good idea to forge paystubs and written verification of employment. He even gave us his buddy’s phone number to give a fake verbal confirmation. If only he would have used his powers for good.
In today’s job market, a lot of people are looking to make the move to a new company. Before making the figurative move to a new job, make the literal move to your new house. If it is something that can’t wait, then make sure you communicate that to the team that has your back and wants to work with you. Don’t be shady.
3) Don’t move large sums of money around or spend it
This also really happened. This borrower was a week away from closing and gave $10,000 to her favorite charity. It was something she did every year and didn’t even think about it. The change in reserves made it no longer approved through Fannie Mae. Luckily, we were able to save it by switching it to Freddie Mac, but this purchase could very well have fallen through.
It doesn’t have to as philanthropic as the example above. You could substitute expensive trip for the charity in the story and have it match many situations we have seen. If you have used a bank statement for qualification, make sure to keep a balance of at least the amount shown on the statement.
4) Don’t look at homes that are out of your price range
Make sure you get preapproved before you start buying a house, so you aren’t looking at homes out of your price range. If you don’t, you will be disappointed in the homes you are actually supposed to be looking at and will be searching for a home that doesn’t exist! You’ll never be happy. Buyers always want to see higher priced homes “just for fun” but it hurts them in the long run. It sets expectations that will likely not be met.
5) Don’t stop paying your bills
Even if you are paying off a loan or credit card with the proceeds of the mortgage, you still have to keep paying them. Even if you are paying off your mortgage with a refinance, you still have to pay the old mortgage until it is paid off. If you can’t make the payment, talk with your team about changing closing dates. You can then close and get funded before the payments are due.
The general rule of thumb is over communicate. Even if you think it is a small detail that doesn’t matter, tell your Mortgage Banker and Realtor anyway. We’ve had a few clients who didn’t disclose that they were divorced because it had been so long ago that they didn’t think it would matter. When the underwriter digs in and asks for the divorce decree days before closing it can become a problem. If the borrower had disclosed this upfront, we would have had plenty of time to request docs from the courts and even wait for snail mail.
Don’t withhold information from your Real Estate Team! Be up front. Addressing possible issues at the start makes a big difference in the process. Contact CityWorth to start your journey buying a house.
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