Preparing to buy a home is an extremely exciting step in life, but it can also be stressful. There are mountains of paperwork and things to remember as well as scheduling important services such as a mailing address change, connecting utilities and more. The loan process is no easy feat, either, and there are a few key things you should know to steer clear of as you prepare to buy your new home.
Avoid credit score disruptions.
Every time a hard inquiry is performed on your credit, it affects your score. A change in points may not seem like a big deal but when loan processors are taking a close look at every detail of your credit, it could mean the difference between being approved for your loan or being denied.
During the initial process of applying for your mortgage loan, you’ll receive a detailed credit report. It’s best not to bring about any disputes during the loan process or cancel cards- it can bring your score down.
Don’t open any new credit lines.
There are many expenses that arise with new home ownership. You may be shopping for furniture or fancy appliances; however, taking on any new amount of debt could throw a curveball at your loan approval. Hang tight until your approval is set in stone before looking into financing or store credit cards anywhere.
Stay up to date on bills.
It can be easy to let payments slip during the process of buying a new home, but it’s imperative to make each payment on time. Mortgage companies will be paying attention to your payment history and may be weary of approving a loan if you have a poor history of taking care of bills on time.
Keep your current job.
Don’t change jobs in the middle of your loan approval process. Lenders want to see a consistent history with a company to know that you’ll have dependable income for paying a mortgage. While it may be a positive change to you, try to hold out until you’re moved into your new home.
Don’t lease or finance a new car.
Cars typically represent added debt. You could get the best interest rate out there and a mortgage lender will still be concerned about your debt-to-income ratio and it could delay the process of being approved for a home.
As you can see, the time between your pre-approval and closing should be a bit of a “quiet stage” when it comes to your credit and finances. Avoiding major changes and staying smart with your money is the best way to ensure that you’re on the way to a new home.