What to Do Before Home Shopping

Shopping for a home can be exciting. However, don’t let the thoughts of your dream house overshadow what has to be done before you even start looking.

1) KNOW WHAT YOU CAN AFFORD

Some people assume they are able to buy a home and that they can afford a specific price range, based on their salary. What not all buyers realize is that their debt may be higher and/or credit score lower than they think. Before you even start your home search, you need to get a pre-approval from a lender. If you are a cash buyer, you will need to have ready a proof of funds. It is not uncommon for some home sellers to request to see a pre-approval letter or proof of funds and Agents don’t show properties without those.

2) DON’T MAKE BIG PURCHASES OR CHANGES

Another thing some people don’t think of is just because you’ve been pre-approved, doesn’t necessarily mean you will get a clear-to-close approval. The loan underwriter can and will question any changes in your financials, which can limit your chance of a loan. With that said:

– Avoid buying any big ticket items such as a car, furniture, etc.

– Don’t change jobs. (they check to make sure you are still employed right before closing)

– Avoid unexplained large deposits into your bank account

3) HAVE THE SAME JOB FOR AT LEAST SIX MONTHS

For the most part, unless you’ve been in school, and just started working in the same industry you studied in school, lenders will want to see the loan applicant to be on the same job for at least six months at the time of application. If you are self employed or an independent contractor, be prepared to show at least your last two years of taxes. If your numbers are tight, they will also want to make sure you were not making less year over year.