Here are some reminders for home buyers, about things to do and not to do which can impact your home mortgage closing. Buying a home is best when it is a planned life event. A couple months before beginning the home search and mortgage preapproval process, looking at your credit and assets is recommended.
Preparation for buying a home can be enhanced by meeting with a mortgage loan officer to discuss credit and funds and loan types. A credit review can be done without a hard hit. I recommend setting up a Credit Karma account and working on credit through that excellent service. While those credit scores may not match the mortgage credit scores, a clear picture can be seen through the Credit Karma report – if you look at the report and not just the scores.
Assets are as critical as credit, and are most often overlooked in planning for a home purchase. A typical home buyer should expect to spend out of pocket before closing about $1500. This is for the earnest money, the home inspection (optional, recommended), and the appraisal. Bank statements should be reviewed for unusual deposits. Sometimes borrowers have regular withdrawals that suggest possible obligations that are not reported on the credit reports.
Reviewing bank statements a couple months before beginning the home search can help with a smooth closing by identifying any items that might raise questions in your loan approval. Once a deposit or a withdrawal is made in your bank account, it cannot be undone.
During the process, home buyers should always be cautious about new credit inquiries, any reductions in verified bank balances, and of course any change in employment or income. During the approval process, up to closing, any possible changes should be discussed with your loan officer. Even that new living room set that is on sale the weekend before closing.
Lenders recheck credit inquires and verify employment before closing. Also, at closing borrowers must sign the application stating their debts, employment, and income; and attest that there have been no changes in their financial situation, such as new debt or a change in income.
Before beginning home search, review:
Income
Credit
Assets
During the process, avoid:
New debt and credit inquiries
New purchases
Changes to income and employment
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