To help you deal with being a homebuyer, I’ve laid out the do’s and don’ts of the home buying process.
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By the “home purchasing process,” we mean the time period during the loan process, or from when you buy your home until a couple weeks after closing when you get your keys. According to Tom, the do’s and don’ts are as follows:
DON’T:
- Make any large deposits
- Move money around
- Let anyone pull your credit
- Open any new credit accounts
- Make any large purchases (i.e., buy a new car or go furniture shopping)
- Pay off any large debts
- Jump jobs (if possible)
Some of these items are self explanatory, but others aren’t. If you absolutely must make some kind of large purchase or go out shopping for furniture for your new home, don’t give any information to any salespeople you interact with. Why? They’ll typically push you into making the next step, which is entering your information (name, date of birth, etc.) into a database. That will then show up as an inquiry and another account that your lender will have to scrutinize.
Inquiries like that can affect your credit score and even result in a turndown of your loan. Not only that, but it can also impact your interest rate. Everything is score-based in 20-point increments, so if you drop 20 points in your score, your rate would jump from 3.875% to 4.125%.
Additionally, paying off a large debt might seem like a good idea in the sense that you’re increasing your ability to buy, but it’s actually not. That kind of activity adds a layered risk because your lender has to then source where you got the money to pay off that debt.
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Inquiries can affect your credit score and even result in a turndown of your loan.
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If you have no choice and have to make a switch in your career by jumping jobs, then by all means do so. That’s understandable. Otherwise, changing jobs can result in changing titles from a salary-based position to a commission-based one, which is where the problem lies. This is because your lender will need at least a year’s worth of proof that your commissioned income is as reliable as your salary income was.
DO:
- Make sure your IRS dealings are in order
- Find a Realtor you’re comfortable with
- Get fully pre-approved by a lender
- Beware of online pre-qualifications
Regarding your IRS dealings, if you haven’t filed your taxes on time or you have a deficiency to the IRS, that will stop you dead in your tracks. As far as online pre-qualifications go, there are many disclaimers to the pre-qualifications process, and the results of an online test can be skewed based on a number of different factors that don’t show up.
I want to give a special thanks to Tom for joining me today. If you have any more questions for him about navigating the home buying process, you can give his office a call at (440) 234-1400.
If you’re looking to buy, sell, or invest in real estate, please don’t hesitate to give us a call. We’d be happy to help!
