When you are looking to buy a home in Washington, D.C., Maryland, or Virginia, there are some things you will want to do. These include getting pre-approved for a loan, working with a trusted and experienced realtor, and making sure your finances are in order.
In addition to those things, among others, there are some you want to avoid. Hence, the need for the 10 Commandments of Buying A Home.
1. Thou Shall Not Change Jobs, Quit Your Job, or Become Self-Employed.
Surprisingly we get some kickback on this one. Here’s the deal folks: When a bank is getting ready to lend you $500,000 and (easily) up, they want to make sure that you are gainfully employed or have a steady and consistent source of income. The key words there are “STEADY AND CONSISTENT.” If in the middle of the home-buying process you decide to interrupt your steady and consistent source of income, it can SEVERELY impact your ability to close on the home on time…and that is IF you are able to close at all.
2. Thou Shall Not Buy A Car, Truck or Van.
It would shock you to learn how many people think it’s a great time to buy a new vehicle, and subsequently take a hard hit on their credit report before closing on their home. Even if the slickest of all slick car salesman during the most wild “Toyota-thon” event of the year says you can afford it, and you very well may be able to, DO NOT purchase that vehicle. Just pretend you cannot afford it. It is a surefire way to make your home loan go sideways and make closing next to impossible on your Washington D.C., Maryland, or Virginia home. You certainly do not want to be like Chris Farley from SNL living in a van down by the river. Because if you do buy that vehicle, you may be living in it.
3. Thou Shall Not Use Credit Excessively or Fall Behind On Payments
When you are planning on buying a home in Washington, D.C., Maryland, or Virginia, it’s smart to maintain and stay up-to-date on your credit. If you have any credit issues or potential payment issues, you will want to keep your real estate agent and your lender in the loop. Together, you will be able to develop a plan to make sure you are able to close on the home you want and maintain your credit score.
4. Thou Shall Not Spend The Money You Have Set Aside For Closing
When you put an offer on your Washington D.C., Maryland, or Virginia home, you probably also provided what is called an ernest money deposit. The ernest money deposit will be deposited in escrow and when you go to closing, you will be required to bring the remaining balance of any taxes, fees, commissions, and any other payments required. Your real estate agent and lender will be able to give you a clear amount as to how much you will need to bring. Since you are making one of the largest investments anyone ever makes, it is imperative to have the correct amount of money available for closing. No money for closing? No close for you.
5. Thou Shall Not Omit Debts or Liabilities on Your Loan Application
Everything is going to be confirmed and verified on your loan application. When you work with a Washington D.C., Maryland, or Virginia lender, they are going to be doing their due-diligence to make sure that you qualify and can afford the loan you want. If you leave off any debts or liability, even if by accident, it could delay or jeopardize your loan entirely! That’s why it’s good to go over your application a few times to make sure it is accurate.
6. Thou Shall Not Buy Furniture
Similar to buying a car, just don’t do it. Even if the slick furniture salesman offers you the couch with no down-payment, free shipping, and blah blah blah. Ask yourself: “Would I rather move in to the new home I’m excited about…or order
7. Thou Shall Not Originate Any Inquiries Into Your Credit
When you are applying for a loan, the bank likes to get a “snap-shot” of your current financial situation. Since the bank is considering lending you a large amount of money, they want to make sure they have a clear picture of your financial situation and how you plan on paying for the loan.
8. Thou Shall Not Make Any Large Deposits Into Your Checking Account, Without First Checking In With Your Loan Officer
Let’s clarify something here. You are allowed to make large deposits. However, your lender will advise you from depositing abnormally large deposits that do not align with your typical sources of income. If you are taking home $9,000 per month from your normal and usual sources of income, then suddenly deposit $25,000 before closing, the lender will certainly want to source that income. Again, when applying for a loan the bank will want to get the “snap-shot”of your current financial picture.
9. Thou Shall Not Change Bank Accounts
Remember when you first applied for the mortgage loan? And your lender sent you a pre-approval letter? In return for that letter, the bank requested many different documents. One of those documents were your bank statements. The lender requires this to ensure that you have the ability to repay the loan. Additionally, it helps the lender source your income and deposits. If you are switching bank accounts during the home-buying process, then the bank statements provided are no longer up-to-date. This is all to say this: IF YOU SWITCH BANK ACCOUNTS, YOU WILL MORE THAN LIKELY HAVE TO START FROM DAY 1.
10. Thou Shall Not Co-Sign a Loan For Anybody
At this point, I’m pretty sure the point has been driven home by now. But if you are taking on extra liabilities during the home buying process, you can pretty much kiss that new home good-bye.