Use these tips to make sure financing comes off without a hitch
A home is likely the biggest purchase you’ll ever make. That’s why it’s so important that the transaction goes smoothly, whether it is your first home, your dream home, or your vacation home. Use these tips to make sure your financing comes off without a hitch:
Pay attention to credit. “There are four credit mistakes to avoid when you’re planning to buy a home in order to maximize your credit score,” says Bernie Marvin, a residential loan officer for Independent Bank. Those mistakes are keeping high credit card balances, missing payments, a recent bankruptcy or foreclosure on your record, and being in collection on a bill. “You need 12 months of on-time payments to show your credit history is good to be able to buy a house,” says Marvin, and you’ll also want to keep balances due below 35% of your credit limit.
Don’t quit your job. “Quitting a job is a financial mistake unless you’re staying in the same industry and you’re improving yourself,” says Marvin. That’s because lenders want to see two years of working history. So, if you get a better job for more money within the same industry, that’s fine. But now is not the time to be exploring new careers.
Keep the big financial picture in mind. Don’t stretch too much on the new payment. If your house payment is $500 now, going for a home that would mean a $900 or $1,000 mortgage payment might be too much of a financial stretch. And don’t open a bunch of new credit cards or purchase a ton of new furniture once you’re in your new home, advises Marvin. “If you experience an unexpected financial emergency, your house can go into foreclosure if you’re already financially strapped.” Reviewing your financial situation is important both before and after your home purchase.
Equal Housing Lender