Real Estate Problems! Don't do this before closing:
1. Don’t Buy or Lease A New Car
Even if you get a new ride every two years, or you’re embarrassed for your new neighbors to see you roll up in that rusty bucket you’ve had since your freshman year in college, now’s not the time to switch up your ride. Hold off on getting that minivan, even if it means your toddler will have to duck her head in shame as you drive through the drop-off point at her daycare center.
High-interest car loans, lease payments, and cash down payments affect your debt-to-earnings ratio and, in the eyes of your lender, threaten your ability to meet your closing obligations and mortgage payments.
2.Don’t Sign Up for Deferred Loans
It doesn’t matter if you don’t have to make that first payment this month or next year; you’ll be paying your mortgage for a long time, and those payments will increase your risk in the minds of financial institutions. Like we’ve said, Lenders are very concerned about your monthly expenses.
3.Don’t switch jobs
If you’re only making a lateral move, or even if you’re in for a major bump in salary, your lender will have to go through the whole validation process to make sure everything’s legit. Don’t make your lender deal with more paperwork. They hate that. Plus, they might see you as a “job-hopper”. They hate that more.
4.Don’t forget to alert your lender to an influx of cash
Many home buyers, especially first-time home buyers, have to scramble to get their cash together for the balance of their down payment, as well as for any closing costs. Whether your bank account is getting fat thanks to deposits from family, cashed-in investment accounts, liquidation of your dad’s collection of original Led Zeppelin LPs or heck… a GoFundMe campaign, your lender will want to know. Their main concern is that this income is “no strings attached,” requiring loan repayments.
It should go without saying that you should never take out cash advances from existing lines of credit, but we’ll say it again: DO NOT use cash advances from existing lines of credit! And be careful of looting your investments, because tax penalties can add to your financial obligations.
5.Don’t Run Up Credit Card Debt (or Open New Credit Card Accounts)
Whether you’re using your credit cards to pay regular bills—thinking you’re holding on to your down payment cash stash—or you’re going nuts buying stuff for your new abode, you don’t want to run up your credit card debt. Nor do you want to open new credit accounts, like those offered through department stores and chain home improvement establishments. You’ll make your lenders shriek in terror, because—sing along with us—DEBT-TO-INCOME RATIO!
If you have any questions or are thinking of making a move, please feel free to give us a shout!
PJ @ 604-725-1258 | Razaik @ 604-537-8447