Shockingly, enough people still do things that can cause themselves heartache when applying for mortgages. Here’s what you need to know if you’re thinking about buying a home in 2017.
Your ability to buy a home rests on the numbers and documentation your mortgage lender has. If there is a change to any of these, your chances of buying a home can be jeopardized. This means that when there is a change to your credit, debit, income assets, or job during the escrow process, you might not be able to buy that house and you’ll risk losing your money. Here are five things to watch out for.
1. Applying for Credit
After you get a contract to buy your house, it’s best not to apply for any credit. This means not applying for car loans, credit cards, utility bills, cell phone bills or any other form of credit whatsoever. Doing so could change your credit score and impact your rate lock and/or fees associated with closing on the house. (If you want to see where your credit stands before applying for a mortgage, you can view two of your credit scores, updated every 14 days, for free on Credit.com.)
2. Changing Credit
You don’t want to close out or dispute any credit cards. If you have any accounts in dispute, the mortgage lender cannot run automated underwriting and they must pause your loan file until your accounts are taken out of dispute. If you close your credit card, that can hurt your credit score, which in turn can increase your fees or put your ability to buy a home at risk.
3. Moving Money Around
Moving money around can cause more headaches than necessary. If you are receiving gift funds, the donor can wire the funds directly to escrow, bypassing your bank account entirely. If any of these funds happen to hit your primary checking account, that could spell more trouble, as it could appear as though you are spending your cash to close.
4. Switching Jobs
Changing jobs and getting into contract with the proper documentation is one thing. Signing a purchase contract and changing jobs is something else entirely, as most mortgage banks typically want you to have your job for at least 30 days. Some lenders will also want a pay stub, an offer letter and verification of employment prior to closing on the home. Word to the wise: Close on the house with your current job, if possible.
5. Shopping for Your Move Before You Actually Close
Hiring a moving company when you have not signed your final loan documents is just plain unnecessary and it sets you up for failure. If you have a moving company come on a certain day and for whatever reason your house doesn’t close, things can become problematic. Hire a moving company after you’ve signed the final loan documents. Same goes for purchasing furniture, especially if those funds come in the form of credit or cash in the bank — close on the house first, then go shopping. Short-term gratification is not worth the risk.
By adhering to these steps after you sign your purchase contract, you will be well on your way to successfully closing escrow with little or no hiccups.