In terms of the tumultuous real estate process, buying should be - key words right there - the easy part. If you have a job and decent credit, maybe you are ready to start your proverbial engines. You may have narrowed down the neighborhoods in which you want to settle, started browsing flooring samples, and begun mentally prioritizing your preferences for annual and perennial flora. And yet, did you realize you might be inadvertently sabotaging the pursuit of your dream home with some very common, very detrimental life choices? It can be a serious shock to think you’ve jinxed your big search, and you certainly don’t want to end up jumping additional hoops or scrambling to rejigger your plans when buying time is nigh.
There’s no time like the present to take stock of your situation and get savvy to potential pitfalls. Here’s a brief list of the biggest no-no’s for those preparing to purchase a home, specifically related to your credit-worthiness and financial fitness as a buyer:
Putting the car before the house
You want a shiny new set of wheels to show off in your spanking-new driveway, right? Wrong. When a mortgage application is upcoming or in progress, buyers’ FICO score needs to be sterling. A new loan will skew your debt-to-income ratio, potentially causing your score to dip. At a point when every digit counts, this is a mistake you can’t afford.
Having an “oops!” moment with your bills
So, you had a hectic month and your credit card payment slipped your mind. Happens to the best of us, right? Perhaps, but cautious buyers know better: one decent ding on your credit report before closing can cause lenders to turn tail and flee like a runaway bride. Your payment history accounts for a full third of your credit score, and the underwriting process will turn up every little blemish. This is the time for extra diligence.
An ill-timed job jump
Above everything else, bankers adore stability. A new job is an exciting life change, but an ill-timed employment shuffle can tank your prospects. Loan officers are on the lookout for sure, steady income with a low likelihood of drying up. Taking a commission-based position can throw up red flags, as can picking up a position in a new field. If you are self-employed or a freelancer, prepare for considerable headaches unless you can furnish the bank with evidence of rock-solid, regular income.
