Eight Do's and Don'ts of Home-buying

When you're nearing the end of your home-buying journey, it's important to be extra careful with your credit, expenses, documents, and income. There are a few things to avoid in order to maintain your credit score and debt-to-income ratio, even after you've received your pre-approval. The hard work you put in with your lender and home-buying team will pay off if you keep these do's and don'ts in mind:

DON'T:

Get a new job or alter your current income

When you're nearing pre-qualification to purchase a home, it's best to stick with your current employment to maintain your monthly and yearly income, even if an opportunity to make a higher wage arises. This is because alterations to your income can potentially have a negative impact on your qualifying debt-to-income ratio.

Make major purchases

Avoid purchasing a new car, adopting a pet, taking up an expensive hobby, or investing in costly vacations. Your home purchase is likely the largest purchase you will make in your lifetime, and it's important that you can afford future mortgage and home insurance payments, deposits, and potential repair costs.

Open new lines of credit

It's a good idea to keep a close watch on your credit score regardless of whether you're purchasing a home or not. It's especially imperative to monitor your credit before and during the mortgage process. Don't take out new loans or open credit cards until you've completed the home-buying process. If you can, pay off your balances in full each month and keep your existing lines of credit open in order to avoid taking a negative impact on your score.

Be unrealistic

There's nothing wrong with taking a step back to reflect if homeownership is the right fit for you. Evaluate your current expenses, budgets, income, and savings. Does homeownership fit within your financial plan? Are you able to budget for deposits, closing expenses, and mortgage payments? Is now the right time to buy? Talk with a housing counselor to parse out an actionable plan to work toward homeownership.

DO:

Communicate often

From start to finish, stay in touch with your team. Talk with your housing counselor, lender, and agent about your needs and expectations often. You can even compare offers from multiple lenders to take advantage of the best-fitting rate and loan term.

Gather your documents

Your lender will need to verify your income, employment, debt, and relations. Keep your documents organized and in one spot to speed up the mortgage approval process.

Take it slow

Your home purchase is a significant milestone in your life. Don't rush! Be patient with your research to make the best choices for your future.

Plan for extra costs

Don't stop saving money after you've gathered your deposit. Plan for homeowner's insurance payments, extra closing costs, home maintenance and repair expenses, property taxes, utility bills, and future expenses like pest prevention services or home security installation.

The homebuying process can be overwhelming and intimidating. NeighborWorks® Toledo Region can help. Talk with a HUD-certified housing counselor about your investment.