Thinking about buying a home?
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Buying a home should not be a difficult process, however many first time buyers, or even people who have a bought a home before do not know exactly where to start. The absolute best place to start the home buying process, is to speak with a knowledgeable lender.
The lender will ask questions and determine the outcome based on income, credit score, debt etc. You will then be provided with a pre-qualification letter (pre, because it is a preliminary document until the bank does further investigation of you). You are now ready to meet with your agent and see homes!
Here are some buyer NO-NO's
- Don’t deposit cash into your bank accounts. Lenders need to source your money and cash is not really traceable. Small, explainable deposits are fine, but getting $10,000 from your parents as a gift in cash is not. Discuss the proper way to track your assets with your loan officer.
- Don’t make any large purchases like a new car or a bunch of new furniture. New debt comes with it, including new monthly obligations. New obligations create new qualifications. People with new debt have higher ratios…higher ratios make for riskier loans…and sometimes qualified borrowers are no longer qualifying.
- Don’t co-sign other loans for anyone. When you co-sign, you are obligated. With that obligation comes higher ratios, as well. Even if you swear you won’t be making the payments, the lender will be counting the payment against you.
- Don’t change bank accounts. Remember, lenders need to source and track assets. That task is significantly easier when there is a consistency of accounts. Frankly, before you even transfer money between accounts, talk to your loan officer.
- Don’t apply for new credit. It doesn’t matter whether it’s a new credit card or a new car, when you have your credit report run by organizations in multiple financial channels (mortgage, credit card, auto, etc.), your FICO score will be affected. Lower credit scores can determine your interest rate and maybe even your eligibility for approval.
- Don’t close any credit accounts. Many clients have erroneously believed that having less available credit makes them less risky and more approvable. Wrong. A major component of your score is your length and depth credit history (as opposed to just your payment history) and your total usage of credit as a percentage of available credit. Closing accounts has a negative impact on both those determinants of your score.
Don’t make ANY late payments on ANYTHING. Any bill you may have may report to the credit bureaus. This could seriously effect your chance of being approved for a mortgage.
REMEMBER - It's ALWAYS best to speak with your lender in regards to anything financial.
Call Dave Sulvetta Re/Max Connection to start your home search! 856.889.8163 or email me at Dave@DaveSulvetta.com