Real Estate Blog - Things you shouldn't do while buying a home !

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Things you shouldn't do while buying a home !

So, your on your way. You have found the house of your dreams. The lender tells you he thinks he can get this done. Your credit is good, your debt to income ratio is good, so are your trade-lines. You have all the winning factors to obtain a loan. I'm sure you feel great. Many customers who first come to us who are not pre-qualified come in having no idea what their credit score is and some believe their credit is so bad they can't get a pack of gum on loan. You then find, the total opposite. That somewhere along the line of restoring your credit worked ! Some will say, well if I can buy a house, I can buy a car, I can get the credit card I have been wanting, maybe I will go buy all new furniture for our new house.....STOP ! TALK TO YOUR LENDER or REAL ESTATE AGENT before you make any new purchases or it can stop the purchase of your new home ! When you apply for a mortgage loan there are several factors in evaluating you, your credit worthiness and home loan application. One of the things the Lenders, underwriting will look at is your credit score, your credit score tells them how well you have managed your credit over the years, they will also look at your debt to income ratio. They will give you credit for all the verifiable income you have and look at what you have going out from that money. If you are over extended this will hurt your chances for obtaining a mortgage loan. That is why it is crucial to NOT run out and buy anything or at least until your lender tells you its okay. Use extreme caution and listen to the wisdom and advice of your lender and/or agent as they want you to be in your new home ! Don't get ahead of yourself through all your excitement. All the other things will come and will come in time. But get into your new home FIRST. Listen to your lender/agent, they will give you the green or red light, but you as a word of caution should always stay in yellow....

A simple over-view and rules to live by when purchasing your new home is :

Don't make any major purchases such as a new car, expensive electronics or appliance, or anything else that you cannot pay cash for. The extra payments may prevent you from getting a loan.

Don't move money from one account or investment to another. One of the things a lender is concerned about is the source of funds for your down payment and closing costs. The lender will ask for statements for the last 3 months for all your bank and investment accounts and even your company 401K and retirement accounts.

Lenders like to see what is referred to as "seasoned money", that is, money that has been accumulating in an account over a period of months or years. If your bank account has a large deposit that was made less than 3 months ago they may think the money was a loan from a relative who is trying to help you qualify for a loan. Then you will have to prove where the funds came from which can be a time consuming process.

Please, leave your money where it is until you talk to a loan officer. And don't move a significant amount around without letting the lender know about it in advance.

The reward for your patience is ohhh sooo bitter sweet !

Posted by Crossville TN Real Estate Melissa Grant Lake Tansi & Fairfield Glade Waterfront on 09/14/2007 06:03 AM

Comments (22)

buy, lenders, agent, car, bank account, move, relocation

Post is included in group: First Time Homebuyer

22 Comments on Things you shouldn't do while buying a home !

Great advise Melissa. Even when buyers are told they still listen to the car salesman sometimes.

09/14/2007 06:42 AM

by Keith Perry - REALTOR® -West Metro Atlanta (Coldwell Banker)

Melissa - good sound advise, you are a very good blogger!

Best regards from Charlottesville!

Charles McDonald

09/14/2007 06:46 AM

by Charles McDonald / Your Trusted Broker for Charlottesville Real Estate (RE/MAX Assured Properties)

Keith and Robin - I am seeing all to much people getting ahead of themselves. A couple of months ago I actually had customers who DID qualify for a loan, on a very fixed income no less which was great, well, DID, until they went and bought a brand new truck with a payment of $482.00 per month and only $1100.00 verifiable income. I TOLD THEM NOT TO DO THIS, THE LENDER TOLD THEM NOT TO DO THIS, so when they came to show off their new truck, I also introduced them to their new home and hope it will sleep comfortably for them ! If you could have seen the look on their face ! At that point I didn't care what they thought of my comment, I worked hard for them, and in the end 2 weeks before closing I knew I wasn't going to get paid for all my hard work.

Charles - Well, hello, Charlottesville, haven't seen you in a couple days was getting worried :) ! Thanks for your kind words ! See you in the rain !

09/14/2007 06:56 AM

by Crossville TN Real Estate Melissa Grant Lake Tansi & Fairfield Glade Waterfront (Third Tennessee Realty and Associates)

I may have overlooked it in your post, but another important item is when shopping for a lender do not let them run a credit check as it affects your score, too. I always advise my clients to tell the lender no credit score until I decide to use your firm

Karen

09/14/2007 07:05 AM

by Karen Kruschka (RE/MAX Allegiance)

Karen - Good tip, I have been told by Lenders ( hope its true ) that you can shop for rates for 30 days and it won't effect your score....hope this is correct, but I only give my customers 3 reputable lenders so hopefully 3 pulls won't hurt ! Thanks for your reply, I am going to start asking some questions again...

09/14/2007 07:16 AM

by Crossville TN Real Estate Melissa Grant Lake Tansi & Fairfield Glade Waterfront (Third Tennessee Realty and Associates)

Yes Melissa, You can have your credit ran multiple times for a car or home and only count as one inquiry within a thirty day period.

09/14/2007 08:31 AM

by Keith Perry - REALTOR® -West Metro Atlanta (Coldwell Banker)

Melissa,

Very good advice and well said :0)

Keep it up,

Tom Weiss

09/14/2007 09:15 AM

by Thomas Weiss (Thomas R. Weiss)

Great advice Melissa,

Time and time again right after a cotracthas ben accepted I hear the clients talk about going furniture shooping and I always give them the advice you just layed out. No running up credit card bills at least until after the closing.

09/14/2007 09:17 AM

by Hugh Krone Sussex County NJ Century 21 Realtor (Century21BillSemmens)

Keith and Robin - Thanks, I though that was the way it was and glad you responded and confirmed it for me.

09/14/2007 09:50 AM

by Crossville TN Real Estate Melissa Grant Lake Tansi & Fairfield Glade Waterfront (Third Tennessee Realty and Associates)

Tom - Thanks ! and thanks for always giving me the thumbs up !

Hugh - Thanks again and as always you give such great examples in your responses.

09/14/2007 09:51 AM

by Crossville TN Real Estate Melissa Grant Lake Tansi & Fairfield Glade Waterfront (Third Tennessee Realty and Associates)

Great advice. So far I've only seen one instance where the Buyer made a vehicle purchase prior to Closing, and it did not upset the real estate loan. I felt like we dodged a huge bullet with that one.

John

09/15/2007 08:08 AM

by Alexander ∞ Slocum Real Estate Team - Vancouver Washington Real Estate (RE/MAX equity group, inc.)

Very good article and great information to clients who may not know better.....

This is now a featured article at the First Time Homebuyer group on AR!!!

09/18/2007 09:38 AM

by Ken Stampe | Wells Fargo | Mortgage Loan Dallas .com (Ken Stampe | Wells Fargo Home Mortgage))

Thanks Ken ! I am honored to have my post featured ! I hope it helps everyone out there who just needs to be educated on the home buying process !

09/18/2007 09:45 AM

by Ken

Melissa: Congrats on your post becoming a featured article. I remember when I was a first time buyer, I did not realize that charging on my credit card could have caused my husband and I not to get the house. But it makes sense. Your post should help a lot of new buyers out there.

10/03/2007 10:12 PM

by Donna Yates, Georgia Realtor, North Georgia Blue Ridge Real Estate (Mountain Investments of North Georgia)

Melissa, this is a great reminder. I say reminder because buyers seem to always forget at least the one about buying a new car --- they just can't wait, it seems. Then they want to blame the loan officer for not telling them they could not go out and raise their liabilities before the purchase was closed.

10/04/2007 10:07 PM

by Rosemary Brooks -Mother & Daughter (866)-750-8282 (Family Realty Group - 866-750-8282)

DON'T make large deposits! I've had many folks do this and the red flag pops up HIGH in the air when underwriting sees the record. Now it's time to show the source of the money... and you betetr hope you can!

11/08/2007 12:52 AM

by West Hartford CT Real Estate Agent | West Hartford Realtor | Michael Chenkus (ERA Broder Group)

Ah.. such good advice. Now.. if they would only listen to us and our professional advice!

11/20/2007 12:03 AM

by West Hartford CT Real Estate Agent | West Hartford Realtor | Michael Chenkus (ERA Broder Group)

Howdy Melissa

You have written some very fine tips for home buyer's.

Have a good one

Dale

12/04/2007 05:52 PM

by Dale Baker, Home Inspectior- in NH & VT (Baker Home Inspections and Consulting Service)

I like the way you layed it out and this is good information. Bookmarked for later use.

01/16/2008 09:13 PM

by Rosemary Brooks -Mother & Daughter (866)-750-8282 (Family Realty Group - 866-750-8282)

Melissa:

Very good/important information for Firsties. So many younger people will be in debt up to their eyeballs by trying to keep up with their buddies-who are also in debt. Nice to hear your helpful thoughts...

02/04/2008 10:10 AM

by Michael McEleney (Iowa Realty)

This is great advise to any potential home buyer. I wish all of my clients would listen to this. It would make my job so much easier.

02/18/2008 08:44 AM

by Don Draughn - Mortgage Professional (High Point NC Mortgages)

Great advice, wish they'd all adhere to it! :)

02/21/2008 07:18 AM

by Sandra Workman ABR, CNHS, QSC, RCC (Speckman Realty Inc., GMAC)

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