My Secrets for Buying a Home Like a Pro

Buying a home for the first time can be confusing. That’s why the tips and strategies you’ll find in my 8-week series will keep you on the right path. It’s a mix of my unique approach and a “behind the scenes” peek of what you should look out for and consider when starting your search for a home.

Did you know that some normal — even harmless everyday activities — could hurt your chances of buying your dream home?  When going through the home process (and even before) you want to avoid any slip-ups that might make your lender think twice.

Here are seven things that you should never, ever, ever, ever do during the time you are searching for a home: 

1. NEVER Change Jobs

Stability is key when seeking approval from lenders, so the months leading up to your home purchase is not a good time to seek other employment or start up any new endeavors. 

While enhancing your career and moving up is important financially, you should wait until after you’ve moved in, or at least signed the final documents, to switch jobs or pursue any entrepreneurial interests. 

Remember, lenders don’t want to take risks and are looking to loan money to someone who they know can pay it back. Leaving your current job can be a red flag to them!

2. NEVER Pay-Off Creditors (without checking with your lender first)

Sounds counterintuitive, but it’s not. Certain types of  loans require you to have certain “reserves” in the bank to qualify.  So, you might actually do more harm than good if you pay off your credit cards, student loans or any other debt you have.  Check with your lender first before you pay anything off.  

Having debt is not always a bad thing and may not be as big of an obstacle to your owning a home as you think. So before you decide to pay it off, speak with your  lender and do so when they tell you it’s okay for you to do so.

3. NEVER Make Major Purchases

One of the fun things about buying a new home is all the other new stuff that comes with it. I know you can’t wait to buy new furniture, appliances, and your wish list off amazon for your weekend organization, but hold off!

A lot of major purchases require credit, and you don’t want to have a large number of inquiries on your report during the loan process. You also don’t want to have a higher debt-to-income ratio than necessary before you close on a home. 

And please please please, hold off on that new car! The best thing to do is to hold off on buying ANYTHING major until you have completely finished the mortgage process and you’ve moved in.

4. NEVER Have Late Payments

While you should always make payments on time, it’s especially helpful before you purchase a home.  You want to be EXTRA careful to not be late on car payments, insurance premiums, credit cards, even parking tickets! This could derail the approval of your mortgage or increase your interest rate.

5. NEVER Accept Out of Ordinary Bank Deposits

I know it seems like it wouldn’t be a big deal, but lenders prefer to see proof that the bulk of your down payment fund has been in your account for at least two months — also known as “seasoning.” 

Stability is key, so you don’t want it to look like money suddenly moved into your account out of nowhere. This looks suspicious to lenders and may signal that you may be depending on family members or others for your down payment. (There is a way to get a loan or gift from family though!) The lender wants to know that you can afford and maintain a mortgage. 

6. NEVER Agree to Co-sign

Don’t cosign anything!  Even though you’re not the one making the payments, and no matter how much you trust your beneficiary, co-signing a loan, no matter how small, increases your debt-to-income ratio and could prevent you from qualifying for a loan.

And a default on the part of the borrower can jeopardize your entire loan process.

7. NEVER Have A Change in Your Assets

Don’t forget that you’re already making a major investment — buying your new home! It’s not the time for other investments even if the stock market is bullish. Other investments would deplete your liquid assets that you need to make lenders comfortable, so you’re better off waiting until you’ve officially bought your new house.

Next week in My Proven Secrets Series, we’ll be talking about all the Red Flags to watch out for along the way to your dream home. Stay tuned!