My Secrets for Buying an Acreage Home
Buying a home can be confusing and even intimidating at times. That’s why the tips and strategies you’ll find in my 8-week series will set you on the right path. It’s my unique approach and a “behind the scenes” glimpse of what you should look out for and consider when starting your own search for an acreage home.
Did you know that some normal – even harmless everyday activities could hurt your chances of buying your dreamed acreage home? You want to avoid any hiccups that might make your lender think twice about your qualification to a mortgage loan. Here are seven things that you should “never, ever, ever, ever” do during the time you are searching for a home:
1. NEVER Change Jobs
Financial stability is key when seeking approval from lenders, so the months leading up to your home purchase is not a good time to seek other employment or start up any new endeavors.
While enhancing your career and moving up is important financially, you should wait until after you’ve closed transaction on the home you’re buying, or at least after loan approval and all paperwork signed to switch jobs or pursue any entrepreneurial interests.
Remember, lenders don’t want to take risks and are looking to loan money to someone who they know can pay it back. Leaving your current job can be a red flag to them!
2. NEVER Pay-Off Creditors (without checking with your lender first)
Sounds wrong… but it’s not. Certain loans require you to have certain “reserves” in the bank to qualify. So, you might actually do more harm than good if you pay off your credit cards, student loans or any other debt you have. Check with your lender first before you pay anything off.
Having debt is not always a bad thing and may not be as big of an obstacle to your owning a home as you think. So don’t pay it off unless your lender tells you doing so WILL HELP you loan qualification.
3. NEVER Make Major Purchases (including getting a new credit card)
One of the fun things about buying a new acreage home is all the other new stuff that comes with it. You are probably thinking your new home “should” come with new furniture, appliances, decorations, yard art, and the list goes on and on!
Most major purchases today require credit, and that means you don’t want to have a large number of inquiries on your report during the loan process. Plus you don’t want to have a higher debt-to-income ratio than necessary before you close on a home. Even if you’re just opening up a new credit card for the free stuff offered to you and not actually using it, the credit inquiry could hurt you during the mortgage underwriting process. Your best bet is to hold off on buying anything major until you have completely finished the mortgage process and you’ve moved in. That new car can wait!
4. NEVER Have Late Payments
You should always make payments on time whether you’re planning on buying a home or not. However, in the months leading up to your looking for an acreage home, you want to be especially careful not to be late on car payments, insurance premiums, credit cards, even parking tickets! This could derail the approval of your mortgage or increase your interest rate.
5. NEVER Accept Out of Ordinary Bank Deposits
Lenders prefer to see proof that the bulk of your down payment fund has been in your account for at least two months – also known as “seasoning.” As stated before, stability is key, so you don’t want it to like look money suddenly moved into your account out of nowhere. This looks suspicious in lenders’ eyes and may indicate that you might be depending on family members or others for your down payment. (There is a way to get a loan or gift from family though!) The lender wants to know that you can afford and maintain a mortgage.
6. NEVER Agree to Co-sign
Your acreage home buying process is not the time to co-sign anything! Even though you’re not the one making the payments, and no matter how much you trust your beneficiary, co-signing a loan, no matter how small, increases your debt-to-income ratio. A default on the part of the borrower can jeopardize your entire loan process.
7. NEVER Have a Change in Your Assets
Don’t forget that you’re already making a major investment – buying your new acreage home! It’s not the time for other investments even if the stock market is bullish. Other investments would deplete your liquid assets that you need to make lenders comfortable, so you’re better off waiting until you’ve officially bought your new house.
Next week in My Secrets for Buying an Acreage Home, we’ll be talking about all the Red Flags along the way to your dreamed acreage home.
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