When you apply for a loan at a bank, they do not know your lifestyle expenses. For this reason, sometimes they will approve you for a loan that is more expensive than you can afford. When you are deciding how much you are comfortable spending on a home, keep in mind the additional expenses that come along with owning a home. There will inevitably be repairs at one point or another. Some homes have HOA fees. And, if it is your first home, you probably aren’t buying your dream home, so be prepared to do renovations as well. This all adds up and, if calculated improperly, can lead to you not being able to afford much other than your house. So, make sure you keep these in mind when you decide on your budget.
Give Yourself Room to Counter
It is always smart to look at homes that are in the lower to mid-range of your budget. Bidding wars and counter offers are a normal part of the home buying process. So, if you find a home at the higher end of your budget you may not have any room to make a competitive counteroffer.
Wait to Make Large Purchases
Once you get pre-approved, you should aim to be pretty consistent in some of your habits. To avoid your loan falling through, don’t open any new credit cards. New credit accounts show up for the bank as “potential” credit. This means you also shouldn’t make any large purchases such as furniture or a new washer and dryer. Even if you pay cash, it can affect the financial information that the bank has, resulting in the sale falling through.
Keep Your Current Job
It is also important to keep your job. A change in employment, even if it is to a higher paying job, can hurt your chances of securing a loan and bring the closing process to a halt. This piece is important, especially in today’s economic climate. With the pandemic affecting so many peoples’ jobs, escrow now verifies employment as late as an hour before closing.
Work With a Direct Lender or a Broker
If you have bad credit, there are still ways to get approved to purchase a home. It is a good idea to work with a broker. A broker can supply you with tailored solutions that can help you get approved. They have knowledge of alternative loans that differ from the conventional loans that a bank will recommend. They can also manage a shorter closing because they have a team behind them, rather than having to go through different departments at a large bank. And, a lot of times, they work with an appraisal team which can also expedite the appraisal process.
If you’d like to begin the process to purchase a property, let’s talk. Even if you’re just at the early planning stages, we’re happy to help you identify next steps and create a game plan to purchase. You can schedule a hassle-free consultation call with us here.