December 2015

Keeping Your Financial Home In Order

Keeping Your Financial Home In Order

So you found “the one”.   Now it’s time to lock in your financing to secure your dream home.

But before you go crazy buying window treatments and sectionals, make sure your financial home is in order. Even if you have good credit, follow these 6 tips until closing to eliminate last minute surprises and have a hassle-free experience.

6 Tips For A Tidy Financial Home

1. Don’t change jobs before applying for a mortgage

This includes starting your own business or quitting your job. Lenders want to see stability a.k.a. you’ll be less likely to default on the loan.

2. Don’t change banks OR make large deposits into your banking account

Your banking history can show stability, which is an important component in the lending process.

Also, a home loan company needs to see 2 things:  the money for your down payment and that it has been sitting in your account for a minimum of 2 months. Seeing a lot of funds suddenly appear is a red flag to a mortgage lender.

3. Don’t make any large purchases that you have to finance

Cars, furniture or any large ticket items, if financed, will increase your debt-to-income (DTI) ratio, which plays a part in what you can afford.   A mortgage bank will view a high DTI negatively.

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4. Don’t apply for new credit cards OR co-sign a loan

Credit pulls will prompt other inquiries on your credit rating.

However, you have 14 days to shop for a mortgage with a one-time impact on your score during that 2-week period. But opening credit accounts or co-signing a loan in a short timeframe may negatively affect your score.  This will represent a risk to the lender.

Even if there are no payments due or no balance on the new accounts, it will increase your debt-to-income ratio.

5. Make your credit card payments on time & don’t charge excessively

Be responsible with your credit. Good credit shows that you can manage your money properly and won’t increase your debt.  You’re a grown up now who’s about to buy a house – it’s what grown ups do.

6. Tell the truth on your mortgage loan application

This tip usually goes without saying: Leaving out any debts or liabilities or padding your income will probably be found out. And that, is fraud.

Walking into your house for the very first time and knowing your financial home is in order will give you peace of mind to start a new chapter in your life – in your new home!

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