Want to Buy a Home? Avoid Doing These Five Things

Buying a home
You’ll want to avoid these things in the weeks and months before buying a home.

Real estate is complicated. If you rush into the market without doing your research, you’re bound to pay too much, ask too little, or end up buying a crack house.

Okay, scratch that last part. Now that everyone on the planet has read the crack house couple’s harrowing tale, we’re all well aware of that particular pitfall. Point is, there’s a lot you should know before you buy.

There are entire books dedicated to things you should do before buying a home. If you’re in the market, you’ve probably read some already. Instead, we’re going to outline five things you must avoid before making your big purchase.

1. Changing Jobs

You would think lenders would be glad you’re moving up in the world, right? Even if your new job gets you a big raise, it could also delay your settlement by a few weeks. Your creditors will want to see proof of employment, including pay stubs, to prove your income at your new job.

Remember: lenders love stability. Changing jobs might be the best decision for your career, but if it can wait until after your move, you’re better to postpone it.

2. Co-signing a loan

Creditors don’t like it when you’re on the hook for someone else’s debts, even if you’re sure the other person on the loan is financially stable.

3. Getting a New Credit Card

Don’t celebrate your upcoming move with a shiny new credit card. Lenders are going to take a close look at your credit score, and applying for a new line of credit tends to lower it by a few points. You want your credit profile to be as consistent as possible in the weeks and months ahead of buying a home.

4. Skipping the bill

Skipping a payment or paying it late will have a negative impact on your credit score. Make your payments on-time and in-full in the months before you purchase a home.

5. Making large purchases

This could cause a problem in a few ways. To start, you’ll want to keep as much cash on hand as possible for your down payment and closing costs. Your creditor may balk if they notice a discrepancy in your cash reserves from one period of the next.

Big purchases, like a new car, also raise your debt-to-income ratio. You want to avoid increasing your debts if you’re thinking of buying a home. If you take on more debt, you could risk going over the max debt-to-income ratio.