Thursday, November 11, 2010

What Not to Do Before Buying a Home

Now that Justin and I are in the home stretch of the home buying process, I thought I would take a look back on our application process.  I heard that back in the day, a mortgage lender would only ask you for your credit score and you would have a house with just the snap of someone’s fingers.  With the economy the way it is, coupled with the foreclosure crisis, you can definitely say those days are long gone. Here are some tips we learned along the way.

1)   Don’t wait until you find a house to get your paperwork in order.  Do you have your W-2s from two years ago? Check. How about your pay stubs from that part-time job? Check. Account and credit card statements, rent receipts, etc?  Expect to dig through your drawers for all these documents.  It’s always a good thing to have documents, such as these, on file once you start your house hunt.  In anticipation of your potential lender and his/her annoying information requests, you should try to be one step of the game.  If you’re anything like myself, you might have to do some digging.  Our lender had tons of patience and would remind our slacker-butts ever so often that these documents were due.  Once you grab a hold of these documents, make sure you keep them handy because you never know when you’ll have to submit them and to whom.  We often had to resend these documents to other people that worked with our particular lender.  This became a major annoyance.  Considering that they all work for the same lending institution, you would think they would share this information between each other; however, they don’t, and prepare to answer the never-ending requests they send your way.

2)   Don't do anything that will change your credit report. Lenders don’t like change.  Take a good look at your credit report.  Look at it in all its glory, and keep it that way during the entire duration of your house hunt.  If you don’t keep your credit report the way it is, you will have to explain these changes, which may affect your eligibility for a mortgage.  I learned about this the hard way when I headed to Macy’s (fistful of gift cards from the wedding in tow) and went on a mini-shopping spree to get all the gifts on the registry we didn’t get. I was like a kid in a candy store, picking up everything from Le Creuset casserole dishes to the much-coveted Dyson Ball vacuum cleaner.  When the lady at the register said I could save an additional 10% to go with my 20% registry discount if I opened a Macy's credit card, I let this little “sales pitch” get the best of me.  Justin was none too pleased when I told him I opened a new credit card and that credit pull showed up on our report shortly thereafter.

3)   Don't take who you work with for granted. Pick who you work with wisely.  Asking people you know for referrals is generally the way to go, but you have to make sure you do your due diligence. Check your references and look at the person’s work or portfolio.  If you decide to work with a friend that happens to be in the business, make sure they have the expertise in the areas you need, in which you need additional attention (e.g.:  a realtor with first-time home buyer experience, a home contractor with kitchen remodeling experience)

I know this isn’t an all-inclusive list, but these three things are what Justin and I had the greatest experience with. Hopefully, first home buyers can learn from our own advice above. Now, if you’ll excuse me, I have to send some additional paperwork over to our home insurer/underwriter/lender.  I swore we just sent this to them last week…

Cheesy graphics courtesy of Microsoft Clip Art

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