For buyers who intend on purchasing a home within the next six months, it’s important to have personal finances in order and set a reasonable plan to make the purchase achievable. However, there are also a few things not to do when preparing to enter the buying process. To ensure a smooth process, you’ll want to avoid the following:
Stay away from making any other large purchase of any kind — especially a new car. Even if you have accumulated the savings to cover it responsibly, control the desire to spend. A large purchase, a car or otherwise, can effect your mortgage terms when the time comes to seek financing. After applications are submitted and the numbers are crunched, your extra loan payment will effect the terms you wind up receiving when all is said and done. The less complicated your finances appear to the loan officer, the better off you will be.
Avoid any unnecessary moving around of money. When a lender reviews your finances for approval, one of the major concerns will be the source of your down payment, closing costs, etc. You’ll also need to provide statements for the last two or three months on any assets. If you have moved money around recently, there may be large deposits and withdrawals on your accounts, which will make it difficult for the lender to properly document. Try to leave your money where it is until after you speak with a loan officer.
If you can prevent it, don’t voluntarily change jobs while trying to purchase or close on a house. Again, the source of your income is extremely important to a lender. If there is any question about where your money will be coming from, it could put your deal in jeopardy and increase your level of risk to the lender. Although sometimes a change in jobs is unforeseen and unpreventable, try to close the deal on your home before making a professional move. You need the lender to be confident in your ability to pay back the loan. Showing a long history of steady income is crucial to your success as a buyer.
By appropriately planning and making smart financial decisions throughout the buying process, you will experience less hurdles and a much more efficient transaction.
This article was contributed by Joanna Narwid, who has been in real estate for 20 years. She owned and ran her own company, Good Neighbor Realty Group, before joining Diane Turton Realty. Joanna can be reached at 732.245.6039.