Hello future homeowners! Purchasing your first home is an exciting journey, but it can also be a bit overwhelming. Today, we’re going to talk about the seven things you absolutely should not do when purchasing a home. Let’s dive right in and make sure your home-buying process goes smoothly!
Maintain Your Credit Status Quo
First things first, do not pull your credit or open new debt after you’ve been approved for financing. It’s crucial to maintain your credit exactly as it was before pre-approval. Any changes, such as opening new credit accounts or taking on additional debt, can impact your financing and approval status. Keep things stable to avoid any hiccups in the process.
Avoid Making Cash Deposits
Second, avoid making cash deposits. If grandma gives you $5,000 from her safety deposit box, do not deposit it into your bank account. These are considered gift funds, and there is a proper way to handle them. The federal Bank Secrecy Act requires all large cash deposits to have a documented paper trail. Acceptable paper trails include direct deposits from your paycheck or transfers between checking and savings accounts. However, cash from untraceable sources, like a safety deposit box, does not qualify.
Say No to Large Purchases
Third, do not make large purchases while going through the home-buying process. Financing any major item, such as a car or furniture, can be detected by lenders because they conduct a soft inquiry on your credit just before closing. Additionally, using the assets in your bank account for large purchases can impact your financing and approval. Keep your spending in check until after you’ve closed on your new home.
Don’t Open a New Business
Fourth, do not open a new business while purchasing a home. Switching from a W-2 employee to being self-employed changes the way lenders assess your income, which can complicate or delay the loan approval process. If you are considering a career shift, consult with your loan officer beforehand, as this transition can significantly impact your financial standing.
Steer Clear of Career Changes
Fifth, avoid making career changes. While a new job opportunity might seem exciting, any changes to your employment status can affect your loan approval. Some job changes may not impact financing, but others can have a significant effect. It’s always best to discuss any career moves with your loan officer before signing a new job offer.
Stay Current on Credit Payments
Sixth, do not make any late payments on your existing credit accounts. Lenders conduct a soft inquiry on your credit before closing, and any recent late payments can make your loan ineligible for financing. Staying current on all your bills is essential during this process.
Prevent Bank Account Overdrafts
Seventh, ensure you do not have overdrafts in your bank account. Keeping a healthy cash balance is vital while going through the mortgage approval process. Overdrafts can signal financial instability to lenders and may negatively impact your approval. Maintaining a positive balance will help you appear financially responsible and ready for homeownership.
By avoiding these seven pitfalls, you’ll be well on your way to securing your dream home. If you have any questions or need further assistance, don’t hesitate to contact Team Weishaar for help. We’re here to make your home-buying process as smooth as possible! Happy house hunting!