Congratulations!  With the new year starting, you decided that the best present you could give yourself is a new home while saying goodbye to your landlord!  You have watched House Hunters religiously on HGTV, you have researched and researched everything you could on the internet, you have even visited open houses to get a feeling for what is out there!  So now is the time to start seriously searching for that first home!

But as you begin the home buying journey, make sure you pay attention not only to the things you SHOULD be doing, but also the things you SHOULD NOT be doing!

DON’T MISS YOUR LOAN PAYMENTS!

You may have talked to a lender and gotten a pre-approval, but this is a long long way from loan commitment and closing on the house!

Up until the time that you have actually sat at the attorney’s office and signed all the papers and gotten the keys to your new home do not forget to continue making all your monthly payments – credit cards, student loans, car payments, etc!

If you miss just one of these, even after you have gotten loan commitment but have not yet closed – missing that one payment could end up on your credit report (which the lender will check just before closing) and could end up having the lender yank your loan commitment!!!

BE CAREFUL WHEN CONSOLIDATING DEBTS!

You probably have gotten all the mailers from all the banks & credit card companies out there about consolidating your debt into one loan! It may sound tempting to do this, but be very careful and read the fine print – there may be hidden fees & higher interest rates which could have a negative impact on your credit!

DON’T CHANGE JOBS OR CAREERS!

If you need to make a change, wait until after you have closed on your home loan!  Changing jobs, even if it is within the same field and for more money, may raise a red flag in the eyes of the lender!  At best, it may end up delaying your closing if the lender needs to reverify several weeks or a month of income – at worst, it could cause the lender to pull your loan commitment!

DON’T SHIFT YOUR FINANCES AROUND!

The lender is going to be requesting updated bank statements throughout the loan process!  If they see a lot of money moving around between a variety of accounts, it may raise red flags!  The lender may want explanations as to what is happening and why! You may need to provide the lender with additional accounting of the funds!  And it may lead to delays in closing, or worst, the lender yanking the loan commitment!

DON’T CHANGE BANKS!

Everything that the lender verified when you first made loan application will be re-verified just before loan commitment is issued!   Changing banks creates more paperwork for you and the lender!

DON’T BUY A CAR OR FURNITURE ON CREDIT!

The lender looks at three things when you make loan application:  credit, assets and debt to income ratio!  A new car or other major purchase such as furniture bought on credit will definitely affect all three of these things and could cause the lender to not approve you!

DON’T MAKE LARGE CASH DEPOSITS IN YOUR BANK ACCOUNT!

The lender is going to look at your bank account and other investment/savings accounts!  They want to see that the money you will need for your down payment and closing costs are in your account for at least 2 months!  If you make a large cash deposit, it may raise some questions with the lender as to where the money came from.  If it was a gift then the person/people providing the gift funds to you may need to sign a gift letter stating that you don’t need to repay the money back!

DON’T LIE TO YOUR LENDER OR ON YOUR LOAN APPLICATION!

This is a given, but just be aware that this is considered loan fraud and there may be stiff penalties, fines – or worse!

DON’T SHOP FOR A HOUSE WITHOUT GETTING PRE APPROVED!

Perhaps this should have been the first “don’t” in my list!  But the last thing you want to do is find a house that you love – only to find out that you can’t afford it or the payment and cash to close you need is more than you want to spend!

DON’T CO-SIGN A LOAN FOR ANYONE!

You may think you are doing a good thing for someone by co-signing for a loan, but that debt will most likely be counted towards your debt to income ratio, which will affect how much the lender is willing to lend to you!

DON’T MAX OUT YOUR CREDIT CARDS – DON’T OVEREXTEND YOURSELF!

You will want to make sure that your debt to income ratio is the same or better as it was when you applied for credit!  Maxing out credit cards and overextending yourself will impact your debt to income ratio – and not in a positive way!

DON’T LET ANY OTHER CREDITORS MAKE INQUIRIES ON YOUR CREDIT!

The lender will run your credit report one last time just before closing!  Seeing a lot of inquiries on the credit report can affect not only your credit score (which could be potentially lowered, resulting in a higher interest rate) and it may signal that you are looking for additional credit, which may raise a red flag with the lender!

DON’T SPEND THE MONEY YOU NEED FOR CLOSING!

This goes without saying, but you definitely don’t want to spend that money!  The lender will want to verify just before closing that you still have that money in your account!  You don’t want to drain your savings becaue even after closing you will have costs that you may not have counted on!

DON’T FIXATE ON THE HOUSE RATHER THAN THE NEIGHBORHOOD!

If the neighborhood is the right neighborhood for you, but the house needs some updates and cosmetic TLC, remember that updates and cosmetic TLC can always be taken care of after closing – but the neighborhood is the neighborhood you will be living in for years to come!  There is a good reason why we say “Location! Location! Location!”

DON’T TALK TO ONLY 1 LENDER!

Not all lenders offer the same loan products, rates and closing costs!  Some lenders offer down payment assistance programs, some will charge higher interest rates but lower closing costs, while other lenders may have a higher interest rate but lower closing costs!  It is good to talk to a couple of lenders to see which one offers you the best loan product for your particular situation!

DON’T WAIT FOR THAT PERFECT HOUSE!

Unfortunately, there is no perfect house out there!  If you have made a list of Wants and Needs, then you know just what those things are that you absolutely need in a house!  If a house has all those “needs” but needs new paint, or the kitchen needs to be updated, or even needs central air to be added to the house, don’t overlook the house – the TLC and updates can always be done after closing!

I know that these are a lot of “Don’t” things, but DOING any of these could end up costing you the ability to purchase your first house in 2023!  The process of buying a house is an emotional one – stressful and exciting at the same time!  Following these “DON’T” tips can help make your home-buying journey as seamless and stress free as possible!

As someone who works with first time homebuyers, I can help you navigate the home-buying journey!  Feel free to contact me and let me know how I can help – even if it is just answering any questions you may have or referring you to some good lenders who also specialize in working with first time home buyers!