Many people, even the seasoned home buyer, make mistakes during the home buying process that can cost them the opportunity to obtain financing or increase their interest rate on financing.  Here are 8 outfalls you should avoid when getting financing on a home purchase.

  1. Do Not Change Jobs.

Changing jobs during the loan process will cause the file to be re-underwritten and reconsidered. This will cause a delay in the process and/or possibly denial of your loan.

  1. Do Not Co-Sign A Loan For Anyone.

During the loan process, changes to your credit report could negatively affect your credit scores and affect your being able to obtain the loan.

  1. Do Not Buy A Vehicle.

Applying for credit to purchase a vehicle will be recorded as an inquiry on your credit. This may decrease your credit score and decrease the amount of money that you can qualify for on the home purchase.

  1. Do Not Use Credit Cards Excessively Or Make Late Payments On Any Of Your Accounts.

Excessive use of credit cards will have negative effects on your credit rating. Inquiries are recorded by credit bureaus and balances on cards exceeding 35% both hurt your debt to income ratio and decrease your credit score.  Late payments of any type can decrease your credit scores as well. This will increase your home loan interest rate, delay loan closing or worse cause you to be denied the loan.

  1. Do Not Spend Money You Have Set Aside For Closing On Your Home.

Most conventional loans require 2 months of reserve funds to be verified in your accounts. Once these funds have been verified for use at closing on your home, spending these reserve funds may result in delays or loan denial.

  1. Do Not Buy Furniture, Appliances, Or Household Items Before Closing.

Large purchases prior to closing causing deductions in your bank accounts or additional debt or credit can negatively affect your loan process resulting in delays or denial of the loan.

  1. Do Not Make Large Deposits Into Your Accounts Without First Checking With Your Loan Originator.

Abnormal deposits or activity into checking, savings, or other financial accounts beyond normal payroll or activity must have money verified by the loan underwriting team. Any unusual activity may result in delays or denials of the loan.

  1. Do Not Change Bank Accounts.

Because the loan process requires a 2-month history of reserve funds, opening or changing bank accounts near the closing date may void that history.  New accounts obviously will not have that 2-month history and can’t be used. This change will result in delays or denial of the loan.

In Conclusion, purchasing a home is a stressful time. We hope that these tips will help you to have a smooth home purchase process and close on time.

As always, let us know if we can be of any help, 910.218.1300.