01/05/2023
If you’re planning to buy a home this year here are the Top 5 Things to Avoid:
1. DON’T make any large purchases on credit or any major changes that effect your income. Financing something significant, like a car, could push your debt to income ratio too high for you to qualify for the mortgage you want. And changing careers will look uncertain. Lenders like to see about two years or more of employment with the same company.
2. DON’T max out credit cards. It doesn’t matter if you owe 500 or 5,000 on credit cards. What matters is the amount of available credit you have left on them and that your payments are current. Ideally credit card balances should always stay below 30% utilization to avoid a negative impact to your credit score.
3. DON’T hoard money! When you apply for a mortgage you’ll need to show where your income is coming from. There’s no paper trail for cash you’ve been stuffing under your mattress. So dumping $10K with no paper trail into your account will present a problem for you and your lender.
4. DON’T assume you have to have 20% down. This is typically true for conventional loans. However, FHA loans only typically require 3.5% down and loans like VA and USDA don’t require a down payment at all!
5. DON’T house shop without a pre-approval. Looking at houses without pre-approval only sets you up for confusion and possibly disappointment. It’s a waste of your time and your realtor’s. A pre-approval let’s you know what price range you should be looking in beforehand so you can avoid shopping over your mortgage range or assuming you can’t afford something when you can!
