So you’re thinking of buying a home in 2017? Congratulations! Whether your plans are immediate or months from now, here are four financial fundamentals that can make the difference between getting the loan you need–or getting rejected.
Your job: If you’re salaried and are offered a new job at a higher or similar pay, changing jobs probably won’t negatively affect your application. The same can be said if you’re an hourly worker and you work a straight 40 hours a week without overtime. However, if a large part of your income is from commissions or bonuses, or you’re an hourly employee who rarely works 40 hours a week, changing jobs could negatively impact your ability to buy a home. The same goes for someone considering becoming self-employed.
Why changing jobs matters: Mortgage lenders want to look at two years’ income. Consequently, if your income is tied to bonuses, commissions or overtime, a change in your employment status creates an uncertainty about your future earnings.
Debt: Don’t take on additional major debt such as furniture, appliances, electronics, jewelry, vacations, expensive weddings or cars. And don’t open any new lines of credit.
Money: Don’t start moving money around. This includes checking accounts, savings accounts, money market funds, certificates of deposit, stock statements, mutual funds and even your company 401K and retirement accounts. Large deposits and withdrawals in your financial accounts create a potentially problematic paper trail for your mortgage lender.
Credit Report: Mistakes in credit reports are quite common, and a mistake can cost you the loan. So review your personal credit report months in advance of applying for a loan. This gives you time to correct any mistakes. The three major credit reporting bureaus, Equifax, Experian, and TransUnion are required to provide you with one free copy of your credit report, at your request, once every 12 months. To order a report, visit annualcreditreport.com, or call 1-877-322-8228.
Are you giving thought to jumping into our Colorado market? Do you have questions or simply want an overview? Don’t hesitate to call me for a no-cost, no-obligation discussion at your convenience.