Thinking of purchasing a home? In case you’re wondering, this is actually a fabulous time. Interest rates are ridiculously low, there are, once again, a record number of homes on the market for sale, and banks are lending again!
Here are some tips that you’ll need when trying to buy:
1. Pay all bills on time! Not just your monthly lease payment (but pay that first!), but everything:
- credit cards
- car payments
Lenders will require bank statements and will run both background checks and credit checks to determine your ability to repay the loan. Make sure everything they see is good!
2. Don’t buy anything new! By this I mean large purchases:
- flat screen tv’s
- a new car
Large ticket items can lower your credit score substantially because they significantly change your debt to income ratio. That means that what you owe becomes too close to what you earn and the banks may determine that you can’t afford to take on more debt. Keep your debt down so the lender will see that you can afford your new house payment.
3. Don’t change jobs! Lenders want to see a history of stable employment. The exception may be if you get a better job in the same profession with a salary increase but, if possible, don’t make any changes until after you’ve gotten the home.
4. Check your credit score. First, look to see if there are any incorrect items listed. If so, write to the credit bureau to have them removed. Find a good credit repair person and talk to your lender to learn what things you should do first to most improve your score. Your bank or lender can give you the name of someone reputable. Start the process there.
Why do I make these warnings?
I’ve seen buyers get their credit score high enough to buy the home they’ve been wanting, only to go out and buy a car first. Guess what? They no longer qualify for the home. Or, (this happens too often) buyers get qualified for their new home, go out and buy new furniture to put in that new home before the closing, and then guess what? They no longer qualify for the home. Lenders will do a final check on your credit the day before or the day of closing to make sure nothing has changed. Once you’re approved for your loan, make sure nothing on your credit report changes!
If you have questions about things like, “should I take this new job?”, check with the lender. See what qualifications they require. The basics requirements stay the same but from lender to lender, but specifics vary somewhat. Perhaps you can wait six months to change jobs until after you’ve moved into the home of your dreams.
Good luck! Now go out and buy your new home! If you’re in the Greensboro, North Carolina area and you’re looking for a wholesale property, check out our website!
If you already have specific questions, ask them here. I’d love to help you be able to buy a home. And be sure to check out my book, The Essential Handbook for Buying a Home!