THE FIVE CARDINAL SINS FOR BUYERS
Sharon Alters gives some great advice for anyone that's in the market to buy a home...don't make any major life changes including quitting your job. From a lenders perspective this can change your financing profile and affect your ability to go to closing.
THE FIVE CARDINAL SINS FOR BUYERS
1. MAKING A LARGE PURCHASE.
2. QUITTING YOUR JOB.
3. PAYING OFF A COLLECTION.
4. CLOSING A CREDIT LINE.
5. OPENING A NEW CREDIT LINE.
Once a Buyer enters the loan underwriting box, the best advice is not do change ANYTHING with their financial picture.
Banks look at the ratios of debt to income, reserves, credit scores, job history, and who knows what else? Sometimes it feels like blood type, paternal lineage, and Facebook page go into the mix.
What many first time homebuyers do not realize and even seasoned buyers or owners re-financing their homes, is that their financial picture needs to remain stable throughout the loan process.
Any change in the picture, such as buying a new vehicle, quitting a hated job, even paying off an old collection debt to make a 'clean slate', or opening or closing credit lines can play havoc with the ultimate goal of a loan approval and getting into that new home.
It may not make sense, but paying off a collection or closing a credit line will actually make your credit score go down. Making a major purchase and changing your income to debt ratio may disqualify you from the loan that you qualified for last month. Quitting your job can reduce your income below the level you need to get a loan. Getting a new job with less income can have the same effect. And job history can go down the drain with a change of type of job.
When you are in the process of obtaining a loan, call your lender if you are thinking of any of the above. These are the Five Cardinal Sins for Buyers and we don't want our Buyers to commit a single one!
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