The Do’s And Don’ts Of House Hunting
Purchasing a home is a large undertaking! There are so many things to consider when trying to find the perfect home for yourself or your family. The process of financing a home requires a borrower to keep in mind a few do’s and don’ts when hunting for their dream house.
The Do's:
Do Check Your Credit Report and Score Early: Order a free copy of your credit report from all three major credit bureaus and review it for inaccuracies. A higher credit score can lead to better interest rates and loan terms.
Do Get Pre-Approved Before House Hunting: Obtain a pre-approval letter from a lender before you start searching for a home. This not only gives you a clear budget but also demonstrates to sellers that you're a serious buyer.
Do Have Your Financial Documents Ready: Gather important documents such as tax returns, pay stubs, bank statements, and any other relevant financial records. Having these readily available will expedite the application process.
Do Maintain Stable Employment: Lenders prefer borrowers with a consistent employment history. Avoid changing jobs during the mortgage application process, if possible.
Do Continue To Pay All Bills On Time: It’s important to pay at least the minimum balance on all bills before or by their due date in the time leading up to and the time after applying for a mortgage.
Do Communicate Openly with Your Lender: Stay in touch with your lender and promptly respond to any requests for information. Transparency helps to prevent delays in the application process.
The Don'ts:
Don't Make Major Purchases Before Closing: Avoid buying a new car or making other significant purchases before closing on your mortgage. Large expenses can impact your credit score and debt-to-income ratio.
Don't Open New Lines of Credit: New credit inquiries can temporarily lower your credit score. Avoid applying for new credit cards or loans during the mortgage application process.
Don't Ignore Your Budget: While you may be approved for a certain loan amount, it's essential to stick to a budget that aligns with your long-term financial goals. Consider factors like property taxes, insurance, and maintenance costs.
Don't Forget About Closing Costs: Closing costs can add up to a significant amount. Be prepared for these fees and factor them into your overall budget.
Don't Hide Financial Information: Be truthful and transparent about your financial situation. Lying about your income, assets, or debts can lead to serious consequences and potential loan denial.
Applying for a mortgage can be a smooth process when you're aware of the do's and don'ts. Following these tips will increase your chances of being approved for your dream home and having a smooth journey to closing. Remember that every borrower's situation is unique, so tailor these tips to your individual circumstances for the best results. Happy house hunting!