Before making a huge financial decision like purchasing a house, it’s important to avoid these four mistakes. Avoid maxing out your credit card, don’t finance any large items, don’t quit your job and don’t make a big financial change are tips to follow before buying a house. In your search to buy a house, don’t forget to look in Shelley, Idaho where there is so much to offer.
Avoid maxing out your credit card
Credit cards are a means to borrow money that you don’t currently have. When you max out your credit card, it actually lowers your credit score. Loans almost always have interest rates which results in an increase in the cost of the loan. Maxing out your credit card also affects your income amount by showing that your income is higher than it actually is and will result in qualifying for a lower loan than you need. A good rule of thumb is to keep your spending below 30% of the card’s credit limit. Another piece of advice is to pay off your credit card each month if you’re able to. Overall, don’t make purchases with money that you don’t have in your account and be sure not to fall into the habit of using your credit card unwisely.
Avoid financing any large items
Credit scores show how responsible you are with your finances. Buying a car, opening a new credit card or opening a new loan are some examples of large items to avoid financing before purchasing a house. You’ll want to do your best to avoid making any large purchases between six months to a year before you buy. Do everything you can to avoid looking like a risky borrower to the lender. Not only is the appearance of being a responsible borrower important, but actually being responsible with your money goes a long way. If you can’t meet the quota of the loan, you could end up in some trouble.
Avoid quitting or changing jobs
It is recommended to be in your job or industry for two years before applying since it’ll make you more likely to be approved for a mortgage loan. Changing or quitting your job before buying a house is a huge red flag to the lender. Remember that you want your credit score and finances to look reliable so that you can be approved for a loan.
Avoid choosing the first mortgage lender you talk to
If you go with the first lender you seek out, chances are, you could be missing out on a better opportunity. Take a little time to do some research and weigh your options. It’s likely that you won’t regret it. Do some research to see what the current high interest rates are and avoid them at all costs. Over time, you’ll pay way more money than you should be rather than with a low interest rate. Some places you can start researching for mortgage lenders are your bank or credit union and local mortgage lenders near you.
You will learn as you go throughout the process of purchasing your home. Rely on a spouse or seek the guidance of a realtor to help you be successful with the buying and selling of your house. These tips are a great place to start but there will be more that you will learn along the way.
