For a smooth home-buying experience, heed these seven warnings.

 

No matter what stage of the home-buying process you find yourself in, you’ll want to avoid these seven major mistakes that are sure to derail your real estate goals: 

1. Making large purchases such as a car, furniture, or appliances. If you’re in the midst of the home-buying process, any changes to your overall financial picture could give your lender pause and potentially nullify any pre-approval you received prior. The financing associated with whatever expensive item you purchased will be a new variable that must be factored into the equation. As a general rule, any sudden and significant change in the amount of money you have in your bank account will be flagged right away. 

2. Changing jobs or becoming self-employed. Sometimes, depending on the circumstances, lenders won’t be able to adjust for or factor in the income you’ll be receiving with a brand-new job, which would be detrimental to your home-buying timeline. Usually, lenders will want to see at least a two-year employment history, and that goes for self-employment, too. 

3. Changing your work hours or taking unpaid time off. If you switch from working 40 hours to working just 20, your income will obviously be impacted, and your lender will be forced to evaluate your situation. Too much unpaid time off could raise similar doubts about your income and financial capabilities; to the extent that you can control it, try to keep working full-time.  

“For a smooth home-buying experience, heed these seven warnings.”

4. Depositing large sums into your bank account or using mattress money for your down payment. Lenders need to be able to source your money, and cash can be difficult to source if you don’t have the additional documentation to trace those funds. Unfortunately, if lenders can’t source your money, then it can’t be used. All large deposits into your account need to have corresponding explanations. 

5. Checking your credit or overusing your credit cards. Heavy reliance on your credit card will naturally affect the monthly payment you have to make on it—yet another moving piece that lenders have to add back into the equation. Any new inquiries into your credit or debts will need to be explained before the process can move forward. 

6. Co-signing on a different loan or establishing new lines of credit. Similar to No. 5, co-signing on a loan changes your debt obligations and debt-to-income ratio. Opening new lines of credit (e.g., HELOC) can change your pre-approval status.

7. Don’t go on vacation when you’re supposed to be closing on your home. You have to physically sign the papers—if you’re not there, you can’t officially close! 

The home-buying process can seem daunting, but if you manage to avoid these seven mistakes, you’ll be in the clear. As always, reach out to us via phone or email with any questions or real estate needs you may have; we’re here to help, and we’d love the opportunity to speak with you soon.