While your doing the search, and especially when you’ve found one and made an offer, there are very important steps to make sure you still qualify at the closing (purchase) of the home.
First things first:
You absolutely should not take out any additional credit or even have an inquiry into your credit report from the time you start the loan application until after you have completed the purchase (closing is when you sign all the documents and make it official).
Make sure you don’t:
- Go on a spending spree for new furniture, new window treatments, etc., and raise your credit balance above 30% of your limit. Revolving credit balance (credit cards, store accounts, etc.) is acceptable if it stays below 30%. Also watch and make sure your CC holder doesn’t drop your limit on a card thus pushing you over that percentage.
- Get ANY “Buy now –Pay later” type of financing, this really hits your credit report as maxed out credit account (as in %100!).
- Co-sign on a loan for anyone else as his or her credit then becomes part of yours (which may be really bad, why else would you be co-signing?)
- Go shopping for large purchase items such as a car, truck, or fishing boat, even if not ready to buy yet. The dealer will pull your credit and that will result in an additional inquiry on your credit report.
- Miss or pay late ANY payments!
Best if you do:
- Carefully document all deposits into your bank and investment accounts. Lenders want to know where you get additional funds once the process is started (making sure your money is legit). This includes any items you sell for a few hundred dollars to your friend or neighbor. Check with the lender if someone is offering a cash gift to help, sometimes that’s not allowed or can only be a certain amount or percentage.
- Keep an eye on mortgage rates. Banks are competitive and if you see a better deal at another lender, negotiate with your lender and they will probably work with you to keep your business.
- Keep your down payment money intact, or add to it. More available cash can sometimes help at negotiations with a seller.
We’ve seen deals fall apart more than once when the buyers didn’t follow the ‘Don’ts’ from the list. You should always be smart with your credit but it’s VERY important when getting a mortgage from a lender. Ask your lender about these items and watch them nod their head (except the part about getting a better deal). If you really feel the need to spend, at least wait until the day AFTER closing!