9 Things to Consider When Buying A House
There are many factors that can cause a deal to fall apart. While some things are out of a buyer’s control, there are a few things that buyers can do or rather, not do, to help their deal make it to closing.
In many cases, a buyer’s offer is contingent on their ability to obtain financing. Even if you have been pre-qualified or pre-approved already, here are a few things to avoid while waiting for your house to close.
Lenders and underwriters are making their decision about your financing based on your stability, reliability, and ability to pay back your loan. They are looking to minimize their risk when loaning you money.
They will continue to look at your debt-to-income ratio, income, employment, and credit up until closing.
So what does this mean for you?
1. Discuss any potential job changes with your lender and real estate agent before you make any decisions. The lender made their decision about your financing with your employment and anticipated income in mind. They may see it as a risky investment to lend to you if they think your employment is not stable.
2. Avoid major purchases or charging excessively. Stay away from large purchases like furniture, appliances, boats, cars, etc. Lenders and underwriters want to see conservative financial choices before they are going to lend you money.
3. Don’t run a credit report on yourself. This will come as an inquiry on the lender’s credit report. When it appears you are looking for more credit, it adds risk for the lender. It also can negatively affect your credit score.
4. Don’t cosign for anything. This adds potential debt for you and more risk for the lender. This will affect your debt-to-income ratio negatively.
5. Keep all necessary information and paperwork accessible until closing (tax returns, W-2’s, etc.) Sometimes duplicates can be costly and take longer to obtain. It could hold up your approval or closing. Cover all your bases by keeping them handy until after closing.
6. Don’t consolidate your bills before talking to your lender. They can help you decide if it’s necessary to consolidate your bills and how to do it, if advised.
7. Don’t change your bank. They consider your bank similarly to your employment. They want to see stability in your financial institution as well as your job history.
8. Pay your bills on time. Lenders want to see a record of responsible payments and successful money management.
9. Don’t move large sums of money/assets without discussing it with your lender. They want to know where your money is from and where it’s going.