Here are the 10 commandments every homebuyer with a loan should follow.
Here are the 10 commandments for every homebuyer getting a loan. Keeping these in mind and sharing them with your buyer clients will help you guide your buyers to a successful closing:
1. Thou shalt not quit your job, become self-employed, or change your job. This is super important because you have to have a certain amount of time at your job to get a loan.
2. Thou shalt not buy a new car, truck, or van. Unless you want to live in it, that is. It will affect your debt-to-income ratio, which can result in you failing to qualify for a loan. If your car dies, make arrangements to borrow or rent one until you close on your purchase.
3. Thou shalt not use credit cards excessively. Don’t allow your monthly payments to fall behind either because that could damage your credit for up to 90 days.
4. Thou shalt not spend the money set aside for closing costs. There are a lot of expenses that come up last minute when buying a home: movers, furniture, boxes, etc. You need to have money set aside for closing, and you have to prove to the lender you have those funds in reserve.
5. Thou shalt not omit any debts or liabilities. You need to be honest about what your debts are. You probably aren’t trying to hide things on purpose, but it happens. Things like child support and alimony need to be addressed, for example.
“Have your lender do a ‘soft pull’ of your credit.”
6. Thou shalt not buy new furniture. Any big change in your debt-to-income ratio is bad, and buying new furniture can get expensive. You have to wait until the day after you close to make these purchases.
7. Thou shalt not get new inquiries on your credit report. This means no opening new credit cards or shopping around for too many lenders. Do your research, but stick to just a few lenders who are doing “soft pulls.”
8. Thou shalt not make large deposits into your checking account. Check with your loan originator before doing so. This happens when you have a side job or something similar that gives you a bunch of cash on hand. Putting in a large amount of cash before closing does not go well with underwriters. Before closing, they have to source where your deposits are coming from; if it’s not something regular like a paycheck, they’re going to have to get invoices and figure out where it’s coming from.
9. Thou shalt not change bank accounts. Keep the money where it is until you close. Feel free to open up a new account after closing.
10. Thou shalt not co-sign for a loan with anyone before closing. Even if it’s your son or favorite niece, don’t do it until after closing. Then you can help them.
If you have questions about these commandments or anything else related to the real estate business, don’t hesitate to reach out via phone or email. I look forward to hearing from you soon.
