Are You Ready to Buy a Home? Avoid These 5 Common Mistakes
Buying a home for the first time is one of the most exciting things a person will ever do. As you plan, shop, and consider your options, make sure that you are avoiding these five common mistakes. Once you are ready to buy a home, Neighborhood Escrow will be proud to offer you escrow services.
- Keep Your Job
- Keep Your Debt-to-Income Ratio the Same
- Do Not Open a New Credit Card
- Do Not Lose Touch
- Do Not Get Behind on Bills
Changing jobs right before you buy a home is a great way to get turned down for a loan or see your interest rate shoot up. It is essential for lenders that you have employment stability. You will find that most lenders want a two-year job history from you and if it is with the same company they will be happier. If you must change your job, be honest with your lender and find out what you can do to minimize the impact on your loan.
Lenders are going to consider your income and job history but, often more importantly, they are going to consider your debt-to-income ratio. This means how much debt do you have monthly compared to how much income you have come in. For example, if a person earns $4,000 per month but has monthly debt of $2,400 they could be a great risk than a person making just $3,000 but with no monthly debt.
In short, you should not do anything in the weeks leading up to buying a home that will significantly change your income or your debt. Do not buy a car. Do not take a pay cut. Do not go from a full-time employee to a part-time employee.
No matter what the perks are, they will not be better for you than a good interest rate on your new home loan. Do not open a credit card until after you have signed the final documents and have the keys in your hands.
It is essential that you stay in touch with your Escrow Officer and with your lender. Your lender will keep us informed so that we can make any last-minute changes. If you have worries about documents or how the process works, talk to someone. Do not make it difficult for those who need to contact you to get in touch with you.
The last thing you want to do is miss a payment or two right before you buy a home. Yes, it can be a stressful and expensive time but any late payment could affect your credit score. Your financials will be checked again right before you buy your home so do not let last-minute issues prevent you from getting the home you’ve gone through the trouble to find.