Planning to make a house purchase can make home buyers anxious. There is a lot of preparation that goes into purchasing a house and mistakes can cost home buyers thousands of dollars.
Thankfully, home buyers can avoid making preventable mistakes by sticking to these five 20178 resolutions that will help prepare anyone for house ownership.
Stay in a Consistent Job
A lender will want to see consistent work experience from potential home buyers. Jumping from job to job is a huge red flag for a lender. The longer the job position has been held the more likely a person is going to continue working and continue making their payments.
That being said, changing jobs to improve a financial situation is sometimes needed. But home buyers should be aware that it can be harder to obtain a mortgage if the job change was to a different industry. If changing within the same industry for better pay and benefits it could help with the loan process. Promotions are always a great change within a job since they are still within the same company.
Ask if there is any extra documentation needed to continue with the process of getting the loan. Moving from a position that was hourly to one that is salaried is preferred for most lenders as salary jobs have more consistent pay.
If looking to change jobs soon, home buyers should simply let the lender know.
Using Credit Cards
When using credit cards while under review for a mortgage it is best for home buyers to keep any rotating balances as low as possible. Using credit cards is needed to ensure they stay active. However, having a high balance on a credit card when a home buyer’s credit is pulled can be damaging. It is best to have all credit cards paid in full (or close to it), to ensure a low credit card utilization percentage.
History of Payments
A lender will want to know if the potential homeowner has a history of making payments on time. Major debts like credit cards or other loans are a great way to prove a good history of payment. So long as none of the accounts were ever in bad standing home buyers will find themselves in good shape.
Even without a credit card or loan, home buyers can prove they are able to make consistent payments. While it can be more difficult to prove this, a few ways to achieve this are to obtain records of consistent, on-time payments of rent, utilities, or other monthly bills.
Every lender will do a credit check. Most will perform a check at the beginning of the loan and again at closing. Going in blind to this situation can lead to shock when surprise problems arise. For this reason, home buyers will want to check on where the credit score is before allowing the bank to pull it.
Credit scores rely on a variety of factors. Someone who makes consistent payments, has low levels of debt, and has paid off a couple of accounts should have decent credit. Building credit is a long and hard process, so starting early is a must. Always look for any claims against the credit that appear to be incorrect or fraudulent.
No Large Purchases
Many home buyers mistakenly believe they are in the clear once they have been pre-approved by a lender. They may decide to make a purchase on a car or even go on vacation and dwindle away their savings account.
This can greatly affect the debt-to-income ratio a person has. This ratio is important because it tells a lender how much debt a person has compared to their income. The higher this percentage the less money a person will have for other expenses.
There is no time like the present to take control of a financial situation. Whether using a new year’s resolution or simply resolving oneself to making better decisions with money, it will make buying a house easier. Pay attention to all debt, make payments on time, continue to have consistent employment, and always talk to a lender about any major life changes.