Monday, June 16, 2014

Buying a Home …. Credit Pitfalls That Buyers Need to be Aware of: The time has come and you are looking to purchase a home. Whether it’s your first home or if you have purchased before, you have done all the right things or so you think, but here are some pitfalls that can trip up a buyer, especially if it’s your first home.

1. You have talked to a lender and have been pre-qualified for a purchase and that’s a good step forward, but once you get pre-qualified and are looking for your house, do not make any new significant purchases during the time of the search or after you make an offer.  Lenders will recheck the credit report 24hrs before the closing and if a new installment  payment shows up on the report, the lender will not be able to do the loan

Remember:  Don’t take on new debt during the mortgage-approval process no matter what. I tell buyers not to even pull out their credit cards until the closing.

2. Don’t change your job.  Sounds pretty self-explanatory, but during the time of making an offer and a closing making a significant life change like a new job can derail you purchase.  Especially if it’s a new job in a different field from what you are currently in.  So if a great offer comes along your way, somehow put off that change until after the closing, lenders are looking for a stable “track record” of employment when it comes to mortgages.  This does not apply to people who are moving because they have been relocated by their company, a job promotion is different than a new job.  However if you are moving for a new job that is significantly different that the one you held before there could be more questions to answer and documents to provide a lender.

Remember:  Don’t switch careers or take drastically different employment paths.

3. Don’t pack away important financial documents.  Lenders will need financial documentation during the critical time between mortgage pre-approval and the closing or settlement. Lenders need copies of bank statements and pay stubs for up to 6 months, and back tax records for 2 -3 years.  They may also need proof that obligations have been paid off, and while you may have sent those documents to someone earlier, an underwriter may want those documents at the last moment. 

Remember: Keep important paperwork where you can easily access it until the transaction is completed and you’re in your new place.

4. Get a copy of your credit report as soon as possible and check for debts.  Identity theft is up, and many people have items that are on their credit report that do not belong to them.

Remember: Have your credit fully checked at the very beginning of the process.  If there are items that do not belong to you, you have time to correct any issues. 

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