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Beverly R. Hart
Associate Broker, REALTOR
Mobile Phone: 678-458-3250, Office Phone: 770-814-2300

Don't make These Mistakes

Don't Make These Mistakes

Important Mistakes To Avoid When You Are Considering Buying A Home

What NOT To Do Before Buying A Home:

Don't buy any major purchases
This especially includes automobiles. Draining your savings or running up credit card debt to buy a new living room set, a big-screen TV or a new car could make a difference in your interest rate and whether you even qualify for a mortgage. Avoid spending money until after the closing is completed, whether by credit card or with cash. Keep debt down and as much money in your bank account as possible. The lender will check bank and credit card accounts.

Don't change jobs
Unless it can't be avoided through such things as drastic location changes, the experts say it's best not to change your employment picture until after closing. A worse move yet is to change from a salaried position to self-employment. Lending institutions like to see steady employment and generally insist that self-employers show two years of successful income.

Don't move around or change banks
When a lender reviews your loan package for approval, one of the things that they are concerned about is the source of your funds for down payment and closing costs. You will have to provide statements from the past two or three months of your liquid assets, including checking accounts, savings accounts, money market funds, certificates of deposit, stock statements, mutual funds, and your company 401K and retirement accounts. If you have moved money around between these accounts, your mortgage underwriter will more than likely require a paper trail of withdrawals and deposits from these accounts. You might be required to produce cancelled checks, deposit receipts, and other inconsequential data, which could get tedious.

Don't do any spring cleaning
Don't throw out bills, bank statements, or tax returns. A better idea than cleaning out is organizing all your important papers that may well be requested by a lender, such as W-2s, 1099 income statements, recent pay stubs and tax returns for the past couple of years if you're self employed. While you're at it, round up your prior title insurance policy, and any canceled checks, settlement statements or other proof that you paid collections or disputed accounts.

Don't mess up your credit
Don't go running around "fixing up your credit" without talking to a professional. You may think you're going to bump your score up a few notches by canceling a bunch of credit cards, for example. But canceling the wrong ones for the wrong reasons can seriously damage your credit score. Credit experts say it's important not to have too few or too many open credit accounts, and the best credit is old credit. Another possible pitfall is to transfer all your credit card balances to one card to get zero balances on the others. Your credit score actually will be higher in most cases if your balances are spread out across several cards.

Don't pay your bills (at least not all of them)
Paying credit cards down to below 50 percent of the your credit limit is generally helpful to boosting your score, but paying off all your debts is only wise if you still have enough cash when it's over to take care of your down payment, closing costs and prepays. In other words, don't deplete you entire savings to pay off your credit cards.

Don't think about lying
Lenders want to know how much cash you have to put into the house - truthfully. If you're borrowing the money for a down payment and have to pay it back, it will have an effect on your ability to meet all your obligations. If it's a gift and doesn't have to be paid back, that's fine. But whatever you do, don't borrow it from your uncle and tell the mortgage banker it's yours - the bank may ask you to document how long you've had it in that bank and where you got it from. A lie could backfire and ruin your whole deal.