(Updated 6/16/16; originally published 7/30/15)
- Steer clear from major purchases or moving money around when trying to buy a home
- Job changes of any kind (like ETSing from the military) can make buying a home very difficult
- Budget out the process with your lender and be sure you have enough in your bank account for closing day!
You’ve got a great lender, you’ve found your home, and the seller has accepted your offer! And now you are going to celebrate by buying a new truck for the oversized garage, new 75” television for the media room, and maybe help your daughter get a home in her college town with all the spare change you have from getting a great deal on your home.
You have not bought your home yet, and the deal is not done! You shall follow the following commandments if you want to actually ever move into your new home.
Thou shalt not change jobs, become self-employed or quit your job
Your lender WILL find out, and your debt-to-income ratios will skyrocket. Most lenders require two years of tax returns for self-employed folks, so if you are just getting started out (maybe as a REALTOR®?), don’t plan on any new homes in the next two years unless you’re paying cash.
Thou shalt not buy a car, truck or van (or you may be living in it)!
You lender works hard to get all your finances approved by the underwriter, and when those numbers change, underwriters get very, very grumpy.
Thou shalt not use credit cards excessively or let your accounts fall behind
The same day as closing, your lender will do a soft pull on your credit, and if there are any major changes, or especially an unpaid bill, your home just went POOF!
Thou shalt not spend money you have set aside for closing
You will get a Loan Estimate (LE) from your lender with approximately how much you will need to bring to closing. If you don’t have this money at closing, then no closing. Incredibly, some buyers get approved and then spend the money they had to buy the house. Don’t do that!
Thou shalt not omit debts or liabilities from your loan application
It’s called mortgage fraud, and though I have not personally had any experience with it either personally or with a customer, I understand that the FBI does care.
Thou shalt not get married or divorced
At least until after the closing. Divorces especially are a major period during which it is probably not a good idea to be buying a home. Texas is a community property state. Even if only your name is on the loan paperwork, your significant other (or soon-to-be-ex-significant other) will have to sign the papers at closing and will own half. Or, if getting married, your newlywed bride or groom’s credit score and debts are now YOUR credit score and debts. Talk to your lender before tying or cutting any knots.
Thou shalt not originate any inquiries into your credit
Don’t look into new credit cards, car loans, nuthin’! Wait until after closing and then go crazy using your sacred American consumer rights.
Thou shalt not make large deposits without first checking with your loan officer
Lenders have tried their hardest to carefully account for all your money. Large deposits create large questions about from where the money came and why. Check with your lender first when moving money around.
Thou shalt not change bank accounts
That is just confusing and, again, is an unhappy surprise for your lender on closing day when they have to track down your money. You will not close on time, at a minimum, and could lose the home altogether.
Thou shalt not co-sign a loan for anyone
Co-signing = signing.
Buying a house is a major, often complicated, and delicate process. Your credit must not change or be affected in any way until you actually sign the paperwork and get possession of your new home. Lenders will not only look into your credit when you first get pre-approved, they will check it again (and sometimes again and again) before they let you sign the mortgage. If you want to buy new furniture for your home or change jobs, just be patient. There will always be time to do it after the closing.
Following these commandments will ensure you have no nasty surprises the day you are scheduled to move in.
Or would you like more info on buying in Central Texas? Get your education at the Fort Hood Home Buyer Academy!