Three BIG No-No’s When Preparing To Purchase A Home
Don’t Buy If You Can’t Commit.
Before you start the process of purchasing a home, ask yourself how long you planning to live there.If you can’t commit to remaining in the same place for at least a few years then owning a home isn’t for you; at least not yet. The transaction costs it takes to buy and sell can be significant. If you don’t plan on being there longer than 7 years then it may be wise to just rent because you can lose money in the short and long term.
Don’t Make Any Major Purchases Before Applying for a Mortgage.?
When applying for a mortgage, lenders look for what is called your “debt-to-income” ratio. A debt-to-income ratio is the percentage of your gross monthly income (before taxes) that you spend towards your debt. This includes monthly housing costs containing: principal, interest, and taxes. It also includes your monthly consumer debt containing: credit cards, student loans, installment debt and car payments. When you are preparing to purchase a home, you want to keep all expenditures and debts low. The worst thing you can do during this time period is finance a car or furniture. It happens all the time!! Wait until you get the keys in your hand at closing before you buy ANYTHING.
Don’t Move Money Around or Change Banks.
When a lender reviews your loan package for approval, one of the things they are concerned about is the source of funds for your down payment and closing costs. If you have been moving money between accounts, your statements may show large deposits and withdrawals. This can work against you big time. Leave your money where it is until you’ve talked to a loan officer.