Money mistakes you can avoid on the way to the closing table
by Scarlett Tassone
SUMMER IS APPROACHING and the home buying season is also heating up. As with most things in life planning ahead is important, including purchasing a home. First things first. Get prequalified early. That allows you time to work on any items needed and allows you time to get things in order prior to your anticipated move date. Once prequalified, there are a few common mistakes to avoid that can be costly.
You should ensure that you are making your monthly payments on time. Having just one 30 day late payment can drop your credit score considerably, possibly disqualifying you from the loan. Minimize credit inquiries and new open accounts. The longer you go without inquiries and new accounts, the stronger your credit becomes.
Avoid making a big career move just before applying for a mortgage or during the loan process. Going from a salary or hourly wage position to a commission income could delay your eligibility for two years. Guidelines require that you have a two-year history of commission or self-employment income. Contact your mortgage consultant with questions on how this will impact your prequalification.
Once your loan is approved, do not go shopping for new furniture, cars or any other big-ticket items before closing. This will impact your debt to income ratio and your loan approval.
Overall, the best course of action in the run up to your home purchase is not to make any major life changes, to pay your bills on time and avoid shopping sprees. While this guidance is especially important for first-time home buyers, it’s good to keep in mind even if a refinance is in your future.