8 Things Not To Do When Buying A House

Buying a House

Buying a house is exciting, especially if it is your first time. The mortgage pre-approval is just the first step in the loan process. Throughout the period that your loan is going through underwriting, the lender is going to keep a keen eye on your finances to make sure you are responsible with your finances and that lending money to you is a risk worth taking. Consequently, if you are thinking about buying a house or in the process of buying a house, here are 8 things you should NOT do.

#1 – Quit your job and get a new job.

When a lender pre-approves you as a buyer the pre-approval is conditional. During the loan underwriting period the lender goes through your paperwork with a fine-toothed comb. One thing they look for is job stability. Right before they issue the clear to close a person working on behalf of the lender may call to verify your current employment. If they discover you have up and quit your job for a new one, they may deny you the final loan approval.

If you really want to switch jobs, do it the day after you close on your new home. If you do it before, you could sabotage your chances of owning a home

#2 – Fall behind on your bills.

A lender will monitor your credit closely so make sure to keep up on your bills. Falling behind on your bills will taint your image as viable loan candidate. It can also skew your debt-to-income (DTI) ratio which lenders use as a gauge to loan you money. If your DTI gets too high because you are not paying your bills that is two strikes against you – higher DTI and tainted payment history. If your DTI goes up above acceptable limits, lenders will not approve your loan.

#3 – Apply for a new credit card or other type of credit.

If you take out another credit card it can make them question whether or not your DTI is going to go up past acceptable limits.

#4 – Max out existing credit cards.

If you max out your existing credit cards your DTI will definitely go up. Avoid this at all costs. Pay your bills on time, and don’t make any new debt.

#5 – Make big purchases.

If you have always dreamed of owning a boat or a motorcycle, or something of the like, going out and buying it during loan approval is not the right time to do it. Wait until you have purchased the house to make that purchase.

#6 – Buy a new car.

A car is one of the biggest liabilities on a person’s credit report. If you have been itching for new wheels, itch a little longer. Whatever you do, don’t buy the car during the loan approval process.

#7 – Make undocumented deposits into your bank account.

Make sure you can justify where your cash came from. 

The lender looks at deposits made into your account. While you may have earned your cash honestly enough and just kept it hidden for some time, large deposits of cash with no trail are questionable.

#8 – Transfer large sums of money between accounts.

Lots of movement between bank accounts may make a lender question what you are doing. Keep the money where it is and wait until you have closed to make any big transfers.

Now you know what not to do.

Buying a house requires that your finances are in order. Lenders will keep a close eye on any movement on your credit cards or bank accounts to make sure you are a risk worth taking. Now that know exactly what not to do when buying a house, play it safe so you can get that house !

Desiree Avila