After 10 years of marriage, I’m still enjoying living in the first home I moved into with my husband. Buying a first home can be one of the most exciting events in a person’s life. Before making this important expenditure, people need to first sit down and determine how they will successfully finance it. After all, a home will likely be the most expensive purchase you make in your life. Talk to a loan officer and determine how much money you can reasonably borrow. Then, decide how much money you want to use as a down payment. You also must decide how many years you will finance your home for. On this blog, you will learn about the process of buying a first home with a loan.
If you're like most people who are about to purchase their first home, you're probably experiencing a mixture of excitement and trepidation. That trepidation likely stems from the thought of navigating home mortgage applications and hoping that you won't get turned down.
Being pre-approved for a loan isn't a guarantee that the financing will come through. If you've been pre-approved for a loan, the financing institution has already run your credit score. However, it is not at all unusual for them to do so again before the loan closes to see if there have been significant changes.
If you're nervous about something going wrong with the loan process during the initial stages of buying a home, you can help hedge your bets by doing what you can to make sure that your credit score remains stable. One of the biggest reasons for loans to not be approved is that something has caused the applicant's credit score to drop to an unacceptable level. Here are just three things you should never do while waiting for loan approval because they may cause your credit score to drop.
1. Don't Apply for a New Credit Card or Auto Loan
Applying for credit results in a hard inquiry on your credit report that can cause a dip in the numbers — even if you're approved for the loan. Hold off on applying for new cards or auto loans until after the sale has been finalized.
2. Don't Close Any of Your Credit Accounts
This may seem counterproductive but don't close credit accounts during the loan approval process even if you've got cards with zero balances that you don't plan on using again. Closing accounts reduces your amount of overall credit, which consequently causes your credit score to decrease — one of the determining factors in figuring credit score is debt-to-income ratio, so keep in mind that closing accounts
3. Don't Pay Down Old Accounts That Have Gone to Collections
Making payments on an old account that has gone to collections will cause the status of the account to be reflected as current on your credit report, which will definitely cause your score to lose many points. Although it's understandable to want to clean up old debt, wait until after you've signed the final papers on your home purchase.
Hopefully, these tips will help you feel more at ease about the process. Contact services like Sun City Home Loans to learn more about home mortgage loans.