When buying a home, you have a lot of responsibility since it is such a large purchase. There are things you can do that can actually derail the deal and cause you to lose the home before finalizing the sale. Here are five things that will certainly jeopardize your home purchase and most likely cause the deal to fall apart.
Applying for New Credit
After you start the process with a mortgage company, do not, under any circumstances, apply for or obtain new credit in any form. Credit can be in the form of a car loan, credit card, student loan, in-store credit cards (e.g. RC Willey, Nordstrom’s, or Lowe’s), personal or payday loans, or even credit extended by healthcare providers (e.g. getting credit to pay for a dental root canal).
Tempting as it may be, don’t do any of these things. If life happens or something comes up that you need one of these things, talk to your lender before doing anything.
Do Not Miss Payments on Existing Debts
This kind of goes without saying, but if you have an existing mortgage, auto payment, student loan, credit card, etc., don’t miss the payment. Tempting as it may be to take a forbearance or differ a payment if offered, don’t do it.
Do Not Spend on Existing Credit Cards
When pre-approved for buying a home, the lender has a snapshot of your credit history. Shortly before closing, they’ll run another report to see if balances have increased on your existing credit obligations. If you’ve spent money on existing credit cards and haven’t paid down the balances, this will upset your debt to equity ratio and can affect getting a loan. If you have to spend on a credit card, make every effort to pay down the balance.
Do Not Close any Credit Accounts or Loans
Just like it’s bad to open new accounts, equally detrimental is closing any credit accounts. As mentioned above, this upsets the debt to equity ratio and can hurt your chances of finalizing the loan.
Do Not Change Jobs
Most lenders require you to be in a position for several months to apply for a mortgage. Changing jobs or losing your job during the buying process will most certainly cause the lender to cancel your loan. Stability is key, so do everything in your power to keep the job you have until after the sale closes.
The Last Word
Buying a home can be a stressful experience, especially if life happens. These are the five main things that can ruin the prospect of buying a home and should be avoided at all costs until after the deal concludes. The important thing is to communicate with your lender about any potential changes to your financial situation before doing anything that could affect your eligibility.