If you're looking to buy a home in the coming months you will be faced with a ton of decisions. We all know that the "process" can sometimes be dizzying, so I'll try and clear cobwebs pointing out some basic logic and common sense traps that you May not realize until too late. Of course all the tips below apply to purchase transactions, but if you are thinking of refinancing your current mortgage, follow these same recommendations.
Credit Check
the day that you think you want to buy a home, contact a mortgage planner that they review your credit. You do not want to be caught off guard with a below average credit report and, of course, the better your credit the more options you will have at their disposal. Reviewing your credit months in advance with your mortgage planner will have time to fix any problems before you actually have to apply for a loan. Of course, before you allow them to run your credit be sure to trigger off the list so that your personal information and credit score would not be sold.
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Today is easier than ever to purchase with your credit card. This is usually done out of necessity and ease of their use, but often just to keep up with the Joneses when you have no money to pay in full. If you are contemplating buying a new home in the next few months to try to avoid all the items that will not be able to pay in full when the statement arrives. While this is still an ideal way to pay for things, ensure that your credit cards have a zero balance before you start looking for a new home.
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Maintenance Reserve
This is a huge problem that has become more important as the lending requirements have gotten harder over the past year. If you want to build their reserves (aka savings and investments) that have at least three months of its total costs, and preferably six months of expenses after your all of your down payment and closing costs are paid. After less than this will cause most lenders to deny you a loan and of course it will put you in a shaky situation to lose your job or become disabled. While most lenders will allow this amount will be held in retirement accounts my recommendation is for it to help the unskilled current accounts that can be accessed without incurring any penalties.
Move money around
It is tempting to change bank accounts or investment accounts for better on-line services and / or interest rates, but here again you must wait until after you close your new home. Lenders like to see a history of at least two months worth of bank statements. If you move the money around it will make it harder for insurers to follow, and you do not want to raise any canceled watching them. If you absolutely must change the bank before closing then ensure that you have made copies of all checks and deposit slips in order to trace the sources of funds. Of course, the lender will require copies of statements from your old bank and new to cross-reference their story to set these aside.
changed jobs
lenders like to see a steady employment history. If you change jobs before you buy your next home to ensure that it is a move in salary and / or responsibilities. Lateral moves are fine, but they should be in the same industry. If you will be making a move, please notify your mortgage planner about this during the first meeting or as soon as you start thinking to change so she can plan accordingly and help direct information underwriter.
Wait until the last minute to apply
Like everything else in life, if you wait until the last minute to apply for a mortgage, you give yourself enough time to research and ensure that you get the best program for your family. When buying a home, you should begin the process with their mortgage planners not a realtor. Once you and your mortgage planner analyzes your goals, dreams and finances, then enter the realtor with the mortgage plan in hand to help you find your home.
Your realtor will appreciate this, she will know that you are qualified to be looking at a price point that you have requested. By doing it the other way around (as most do), you will be transferred to the home-buying decision and to act from impulse or emotion rather than sound thinking. On refinance transactions, most people wait until they can no longer pay their bills and late notices start to accumulate.
straddling the two houses
It's all a big drop for many people throughout the country as they have purchased their new home, thinking that they will sell your current home. The problem for most is that they have no money to carry two houses. My advice is that if you are thinking about buying a new home you should sell your existing one first. Now it can mean that you have to rent for awhile if you do not have a house lined up, but it is much better than losing one or both of the foreclosure because it could not afford the mortgage payments. This in turn will destroy your credit and you know how important good credit.
I hope the above advice is not a shock to you, but if you do not slow down and analyze what you do unconsciously can create a negative situation to your goals. If you are just starting to think about buying a new home or refinancing your current mortgage, pick up the phone and call your mortgage planner now.
Make life happen and take control of your financial future, you will be glad you did
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