Journey to a
NEW Home
By Dave Muti
8 Financial Pitfalls to Avoid:
If you are embarking on the adventure of buying a home in the coming months you will be faced with a myriad
of decisions. While the loan approval journey can be a wild ride, the following 8 tips could be the lifeline that
carries you to the magical world of homeownership.
1
Prepare for the Worst
The day that you think you might want to buy a house, you should contact your Mortgage Planner
to have them review your credit. You don’t want to be caught off guard with a below-average credit
report since better credit equals more options for structuring a mortgage that
gets you where you want to go at the end of your financial journey.
By reviewing your credit months in advance, you will have the time
to repair any issues before you actually have to apply for
3
Say No to New Auto Expenses
you job or become disabled. While more lenders
a loan. One tip: before you have anyone run your credit,
The advice above holds true for car leases and
will permit this amount to beheld in retirement
make sure you have opted out of the triggers lists so your
loans. Try not to make any new purchases or
accounts, my recommendation is for this to be
personal information and credit score do not get sold.
upgrades until after you close on your new
held in non-qualified liquid accounts that you
home. If you have to finance a new car because
can access without incurring any penalties.
2
Stay Low your current lease is due to expire, consult with
5
Stay Put
Today it is easier than ever to make purchases with your credit your Mortgage Planner before incurring this
The myriad of bank and investment options
cards. This is usually done out of necessity and convenience in our new loan as it could knock your debt-to-income
make it tempting to juggle accounts, but here
quest to keep up with the Jonseses when you don’t have the cash ratios off balance. This is not a good thing.
again you should wait until after you close on
to pay in full. If you are contemplating purchasing a new home
within the next few months, try to avoid any items that you will
4
Maintain Reserves
your new home. Lenders like to see a history of
not be able to pay off in full when the statement arrives. While
This is a big issue that has become even more
at least two months worth of bank statements.
this is always the ideal way to pay for things, keeping your
important as lending requirements have gotten
If you move money around, underwriters could
tougher over the past year. You want to build
have a tough time tracking it and you don’t want
credit card balances low is even more important once you
your reserves (aka savings and investments) to
to raise any undo scrutiny. If you absolutely
begin to search for a new home.
have at least three months of expenses AFTER
must change banks before a closing, then ensure
your down payment and all of your closing
that you make copies of all checks and deposit
costs are paid. Having less than this could cause
slips in order to trace and source the funds. Of
lenders to deny your loan. Low reserves could
course the lender will require copies of state-
also put you in a shaky situation should you lose
ments from your old bank and the new one to
cross reference your story, so set these aside.
Continued on page 25
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