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10 Things NOT to Do When Buying A Home

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Education & Training

MoneyDownDrainReady to take advantage of the low home prices of today’s real estate market?  Great but whether you are a first-time home buyer or this will be your 5th home purchase, if you require financing, there are things you must not do in today’s ever-changing lending market (that you probably could do 5- 10 years ago) that will jeopardize your real estate purchase.  And, these are not just things to avoid while getting pre-qualified/pre-approved but even up to the day of your closing because if you have not closed yet, your closing may be delayed or forfeited, causing your money spent on inspections, appraisals, etc. to go down the drain.

Here are the top 10 things NOT to do when buying a home in order to qualify for a mortgage according to John Norwood, president of Metro Atlanta’s own Neighborhood Mortgage, Inc.:


1. Don’t change your job before applying for a home loan.  Now is not the right time to become self-employed or quit your job. You want to show stability, which means you’ll be less likely to default on the loan.

2. Don’t change banks.  Like your employment, you want your banking history to show stability.

3. Do not finance another vehicle.  Doing this may increases your debt-to-income ratio.

4. Don’t finance furniture or appliances.  Like financing a car, charging big-ticket items increases your debt-to-income ratio and now is not the time.

5. Make sure you pay your credit cards on time and do not charge excessively.  You need a track record of responsibility and show that you can manage your money.

6. Don’t make large deposits into your bank accounts.  Lenders want to see that your down payment has been in your account for at least two months.

7. Don’t lie on your loan application or think about bending the truth on your income or debts.  It’s FRAUD!

8. Don’t co-sign a loan for anyone.  Even if you’re not the one making the payments on that loan, it increases your debt-to-income ratio.

9. Don’t have inquiries made into your credit.  Looking for new credit translates into higher risk for lenders. If your inquiries are related to your mortgage search, it usually doesn’t affect your credit score because the assumption is you are rate shopping. But opening credit accounts within a short period of time represents some risk and your credit could take a hit. It’s probably not a huge factor in your ability to repay a loan but why take chances?

10. SAVE, SAVE, SAVE!  Part of the price of financing a loan is the closing costs and you’ll likely have the responsibility for paying for all or at least some of them. Make sure you have enough for your share of the obligation.

Want more of the dos and don’ts of purchasing a home?  For more information on navigating today’s financing market or on purchasing a home, contact John Norwood at 678-549-9371or john@nloans.netHappy house hunting!

Comments (1)

Shannon Coe
exp realty of California, Inc. - Oceanside, CA
760-586-5268, San Diego Realtor

Great points, sometimes we need lists of what NOT to do. 

Feb 19, 2012 01:36 AM