If you've done any research on the home-buying process, you know it’s just that – a process. And for many potential home buyers, this process starts before they’re even aware. Unfortunately, sometimes the decisions potential home buyers make with money, credit and employment can greatly influence when they can buy a home and the type of loan they qualify for.
To help make the road to home ownership a little smoother, here are 5 things to avoid when thinking about buying a home.
Use cash instead of credit for your purchases.
If necessary, postpone major purchases until you have saved enough money to pay for your purchase in full. Most lenders will evaluate your overall debt when determining your ability to take on a major purchase, like a home. So don’t run out and buy a car if you’re trying to also buy a house, since the additional debt will affect your mortgage qualification and your ability to make loans payments.
Not staying informed as to your credit balances.
Although this is good practice in general, it’s especially important when you’re thinking about buying a home. Uncertainty about how much you owe is dangerous and you don’t want any surprises to pop up when a potential lender pulls your credit.
Avoid skipping bills to make other payments.
Although skipping a payment may bring immediate relief, it is only a temporary solution if you have a long-term problem with cash flow and have trouble living within a budget.
Changing jobs before applying for a mortgage.
Most lenders look for consistency in employment when evaluating your ability to pay back your loan. If you can, avoid a change in jobs right before or while you’re in the midst of applying and being approved for a mortgage.
Not seasoning your assets.
“Seasoned assets” refers to liquid cash, so usually money in a checking or saving account, which have been available to you for a period of time. Many lenders require a borrower’s reserves to be seasoned for a minimum of 30 - 60 days.