Things Not to Do When Buying

No Major Purchases

You do not want to create any kind of debt. This applies to any major purchases including: appliances, automobiles, electronic equipment, expensive weddings, furniture, jewelry, vacations, etc.

Do Not Buy a Car

During a loan interview, the loan officer will ask you about your income, savings, and debts. Often, (s)he will inform you that having a car payment may put you out of reach from qualifying for a home loan.

Debt-to-Income Ratios and Car Payments

To determine your ability to qualify for a mortgage loan, a lender looks at what is called your "debt-service" ratio. A debt-to-income ratio is simply the percentage of your gross monthly income that you spend on debt. This would consist of: monthly housing costs, including principal, interest, taxes, insurance, and homeowner's association fees (if any); and monthly consumer debt, including credit cards, student loans, installment debt, and car payments.

Change Jobs?

For most homebuyers, changing employers probably will not affect your ability for a mortgage loan qualification, especially if you are going to be making more money. However, for some the effects of changing jobs can be extremely damaging to your loan application.

Don't Move Money Around

One of the things lenders are concerned about when reviewing your loan package is the source of funds for your down payment and closing costs. Expect to be asked to provide statements for the last few months on any of your liquid assets. This includes: checking accounts, savings accounts, certificates of deposit, mutual funds, money market funds, stock statements and retirement accounts.

During that time, if you have been moving money between accounts, there may be large deposits and withdrawals in some of them.

The mortgage underwriter (or loan approver) will most likely require a complete paper trail of all the deposits and withdrawals. If this happens, expect to be asked to produce deposit receipts, canceled checks, and other seemingly trivial data.

But before you blow your cool, try to remember they are only doing their job. It is a requirement on most loans to completely document the source of funds, for quality control and to eliminate potential fraud. When you move your money around, you make it more difficult for the lender to properly document and approve your loan.

Leave your money where it is until you consult a loan officer, and do not change your bank.

 
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