Don’t Spend A Penny!
If you are getting a mortgage loan don’t spend a penny,…without consulting me or your mortgage advisor!
Do Not Incur New Debt
If you are in the home buying process it is really important that you do not incur any new debt. While you should not incur new debt really anytime during your home search, it is especially important that you not take on any new debt after you have been pre-approved for a mortgage loan. If you take on new debt after you get your loan pre-approval it will be very likely that you cannot get the loan you were approved for.
Now yes, you can buy groceries, gas for the car, have your clothes cleaned, and your hair cut. Stick to those monthly budget expenditures that you have on a normal monthly basis.
What Do You Mean, Don’t Spend A Dime?
Here are examples of things you should not do during your home buying process:
1. Do not go out and lease or buy a car
2. Do not book travel or a vacation on your credit card or drain your checking and savings account dry
3. Do not purchase a new business entity
4. Don’t tamper with your credit…and that may mean not paying off a large credit card bill!!
So, before you spend money on anything other than usual monthly expenses and before you pay down debt, contact your mortgage lender to see if that action will affect your pre approval and ability to buy a house. More than likely it will. Some purchases may be absolutely necessary. Some may not even affect a thing. But it’s better to be safe than sorry.
Too many buyers aren’t advised of this and don’t think twice about spending money. Unfortunately, they find out the hard way. And sometimes even if they are advised they make the mistake anyway.
When You Don’t Follow the Advice
I had a client who offered and was successful in getting their offer accepted on a beautiful waterfront home. They were successful business people who owned several hotels in different areas, but I still gave them the advice, “Don’t do anything major until we get your house closed”. Well, they did something major…
The Commandments of the Home Buying Process
There are some “commandments” when it comes to the home buying process, they are:
- Do not quit your job, become self-employed or change jobs.
- Do not buy a vehicle, truck, van, car, ATV, or even a small boat. If you do you might be living in that van!
- Do not let your credit card accounts and other credit accounts fall behind.
- Do not use your credit cards excessively (more than you have in the past 12 months).
- Do not spend the money you have set aside for a downpayment or closing. You can add to your bank accounts through regular savings, but do not deplete them by unusual amounts.
- Do be honest on your loan application. Include everything, do not omit anything. The credit report will disclose all activity anyway.
- Do not decide to buy new furniture for the house on credit.
- Do not apply for other credit because it will trigger a credit check and that becomes a red flag on your credit report.
- Do not deposit large sums of money, larger than your usual deposits, without checking it out with your lender.
- Do not change banks and bank accounts.
- Do not be the co-signer on a another person—even one of your children.