If you’re considering purchasing a house, preserving your credit and financial security is important in order to secure the best loan possible. Here are 7 mistakes to avoid.
1. Changing Jobs
In order to qualify for a loan you’ll need to prove your income, assets and liabilities. Changing or quitting a job can prevent or slow down a loan approval.
2. Buying a New Car or Opening New Lines of Credit
Taking out a loan for a car can temporarily lower your credit score and/or affect the loan amount you may qualify for your home purchase. Similarly, opening new credit cards can temporarily impact your creditworthiness.
3. Late or Missing Payments
Lenders will look at your consistency with paying bills, credit cards, and other payments on time. Make sure your accounts are current.
4. Paying Off Credit Cards
This may seem counter intuitive, but the longer you have good-standing accounts, the better qualified you are for a loan. Sometimes when you close a credit card account it negatively affects your credit so be sure to consult your lender first.
5. Making Large Deposits or Withdrawals
When you apply for a home loan, you’ll be required to provide bank statements for several months so making large deposits or taking large amounts out of your bank accounts can look fishy. If a friend or family member is gifting you money for your home, ask your lender for advice on how to best receive the funds.
6. Co-Signing a Loan
Co-signing a loan for someone increases your liabilities which can in turn decrease your loan qualification amount.
7. Looking Without Being Pre-Qualified
Do not start looking at properties before you’ve been pre-qualified:
- The market in Northern Colorado can be competitive so when you find the home you want, being prepared to make an offer is key.
- You’ll be sad if you find your dream home only to realize it’s outside of your budget/the loan amount you qualify for.