Wednesday, July 18, 2012

The Ten Commandments When Preparing to Apply for a Mortgage

Many homebuyers have already searched homes on the internet and are eager to begin viewing them.  This makes the initial conversation with clients difficult at times because I'd be doing them a disservice to simply say "OK, let's go" and just start showing them houses.  I advise all of my clients that the first step to buying a home is to get pre-qualified for a loan so that we can not only see homes, but we can see homes in the appropriate price range.  Showing homes outside of a client's price range is setting them up for a major disappointment when they can either not afford the home they fall in love with or have wasted countless hours looking far below what they can afford.

Once the buyer is pre-qualified, locates the home of their dreams, and gets an offer accepted, the process has only just begun.  There is still a lot that can happen between acceptance and closing to ruin a deal.  One of the most controllable factors is what the buyer does with their financial situation between applying for the loan and the day of closing.  Jon Sadler of The Jon Sadler Home Loan Group at Bank of America, provides an extremely helpful list of things NOT to do during the mortgage process. He discovered them at a Xinnix class and calls them "The Ten Commandments when preparing to apply for a mortgage."  

1.  Thou shalt not change jobs, become self-employed or quit your job.
2.  Thou shalt not buy a car, truck or van. 
3.  Thou shalt not use charge cards excessively or let your accounts fall behind.
4.  Thou shalt not spend money you have set aside for closing.
5.  Thou shalt not omit debts or liabilities from your loan application.
6.  Thou shalt not buy furniture. 
7.  Thou shalt not originate any inquiries into your credit.
8.  Thou shalt not make large deposits without first checking with your loan officer. 
9.  Thou shalt not change bank accounts. 
10.  Thou shalt not co-sign on a loan for anyone.  

Many of the items listed above are tempting and often things you wouldn't think could hurt your ability to get a loan.  However, any sort of blip on your financial radar could be the difference between moving into that home of your dreams and starting over with the entire home-buying process.  

If you have any other questions regarding the home-buying process please visit my website and the "buyer resources page" or email me directly at scottmorrison@kw.com.  

Take care, 
Scott Morrison

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