Throwing a Wrench Into Your Home Purchase

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Presumably if you have a house under agreement to buy, you want to make sure everything goes as smoothly as possible. As a veteran in the real estate business I’ve seen all kinds of wrenches get thrown into the home purchase process, sometimes even resulting in the buyers losing out on the home of their dreams. What’s most disturbing is that it’s usually the buyers themselves that unknowingly throw the wrench into the process. Here are 5 DON’T’s you must abide by when buying the home of your dreams.

1. DON’T Buy New Furniture - One of the biggest mistakes I’ve seen is when buyers go out and take advantage of the NO PAYMENT FOR 5 YEARS offers made by home furniture companies. Here’s the problem – those companies don’t just give you the furniture and wait five years for payments. No, they give you credit so that you can borrow the money and delay payment for several years. When you borrow money, your credit score changes. The banks always run an updated credit report prior to closing. If your score has gone down, which it will if you borrowed money for furniture, you may lose your ability to get a mortgage.

2. DON’T Buy a New Car - This is the same explanation as #1. Don’t even shop for a car because the mere act of a car financing company running your credit report will create an inquiry on your credit and will low your credit score. Don’t buy or shop for a vehicle. Don’t lease a vehicle. Even if the new car payment would be the same or lower than your current one, the new debt will hurt your credit score. During the home buying process you should not give out your social security for any reason (other than to get a mortgage) because if a company is looking for your social, you are messing with your credit. As well, don’t open a credit card for any reason. There are tons of stores that offer all kinds of incentives to get you to open credit cards…like 10% off your purchase if you open a credit card. Ignore these offers when buying a home. After you are in the house and the mortgage has closed, you can do what you want.

3. DON’T Switch Jobs – Do not switch jobs for any reason….even if it’s more money, a better position etc. Along these same lines, if there is any change in your employment, let your mortgage company know. They will find out. We don’t want them finding out the day of closing when they call to verify you are still working (which they will). Be up front with your mortgage team.

4. DON’T Move Money - Your mortgage company is not a fan of large deposits. If you deposit a large amount (usually $1000 or higher – or many little deposits that add up to a lot) the bank will want you to prove where it came from. The bank won’t let you use money that you can’t verify. If you move money around, keep documentation because the bank is going to question where the money came from.

5. DON’T Co-Sign – If you co-sign for a friend or family member it is the same as you taking out a loan for yourself. Your credit score will go down. The bank will use that debt against you. The debt will show up on your credit report. Do not co-sign.

There are enough potential issues that can arise when buying a home, make sure that you do all that you can to ensure a smooth and hassle free journey to the closing table.

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