BUYING A HOME IN GREATER PHOENIX | WHAT NOT TO DO BEFORE PURCHASING A HOME
Did you know that seemingly harmless activities, such as changing jobs or buying a new car, could potentially hinder your chances of buying your dream home? To ensure your lender remains confident in processing your mortgage loan, it’s crucial to avoid major changes. Additionally, there are other less obvious factors that could also affect your application and jeopardize the deal when buying your Metro Phoenix home. Here are some important considerations, including some that might not immediately come to mind.
Don’t Change Jobs
Stability is key when seeking approval from lenders, so the months leading up to your home purchase is not a good time to seek other employment or start up any new endeavors.
While enhancing your career and moving up is important financially, you should wait until you’ve signed the final documents to switch jobs or pursue any entrepreneurial interests. Lenders don’t want to take risks and want to loan money to someone they know can pay it back. Leaving your current job can be a red flag to them in some cases.
Check With Your Lender before Paying Off Creditors
Having certain debts can be a better option than depleting your bank reserves when trying to qualify for a mortgage loan. Although counterintuitive, paying off debt can make you a less qualified borrower. Before paying off credit cards, student loans, or any other debt, consult your lender to ensure it won’t hinder your qualification process. Debt might not be as big of an obstacle as you think, so avoid paying it off unless advised by your lender.
Timing Matters: Close On Your New Home Before Making Major Purchases
Buying a new home and the excitement of personalizing and decorating go hand in hand. But timing is crucial. Major purchases often involve credit inquiries, and having too many of them during the loan process could affect your credit score and debt-to-income ratio. It’s best to wait until you’ve completed the mortgage process and moved into your new home before making significant purchases like a new furniture, tech, and new appliances.
Never Make a Late Payment
Making payments on time is always important, but it is especially critical in the months leading up to your home purchase. Assure that your car payments, insurance premiums, credit cards, even parking tickets, are paid on time. Late payments could increase your interest rate or derail the approval of your mortgage, altogether.
Avoid Unusual Bank Deposits
Lenders prefer to see proof that the bulk of your down payment fund has been in your account for at least two months. This is known as “seasoning.” The lender needs assurance that you can afford and sustain your payments throughout the mortgage term. If money suddenly appears in your account, it might raise suspicion and give the impression that you are relying on others for your down payment.
Never Co-sign for A Loan
Mortgages and co-signing for loans don’t mix, even with the most trustworthy friend. While few intend to default on a loan, unexpected circumstances can jeopardize your loan approval. Co-signing increases your debt-to-income ratio, even if you won’t be making the payment.
Don’t Accrue More Assets
When purchasing your new home, refrain from making other investments, even in a bullish stock market. Wait until you’ve officially bought the house to avoid depleting your liquid assets and potentially making lenders uncomfortable.
When you are applying for a mortgage, your best bet is to keep your credit score high and your finances stable. Don’t give the underwriter a reason to second-guess your ability to pay the mortgage. If you have any questions about your specific situation, reach out to me or visit my website for more information about buying your next home in the Greater Phoenix area.
I'm Kathleen and I love sharing the Arizona lifestyle by helping people who are relocating to, or from, Arizona with their real estate needs. Let's talk about how I can help you make your real estate goals happen from wherever you are!
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Chandler, AZ 85286
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