What NOT to do Before Buying A Home: WORST Moves for Homebuyers

There are a number of things that could either hurt your chances of buying a home, or severely hinder them, but just a few very smart preparations  on your part can make the process exponentially easier. When you decide that you are ready to buy a home, or sell your existing home and buy another home, remember these important tips:

1. First things first, get your finances in order.

2. As a rule, do not deposit a large sum of money into your bank account within three months of purchasing a home without being able to explain in detail and prove exactly where the money came from.

For example, If you are getting any money as a gift for the downpayment, get it now and put into your bank account. As a safeguard, also have whomever is "gifting" you this money maintain the prior three and following three months statements on the account from which the money came from. This may be a requirement from the bank.  The bank may also require a signed "Gift Letter".

3. Do not change banks, or move money around from bank to bank. Your future lender will require to see proof of your  source of funds for your down payment and closing costs. Most banks request statements for the last two or three months on any of your liquid assets. This includes checking accounts, savings accounts, money market funds, certificates of deposit, stock statements, mutual funds, and even your company 401K and retirement accounts.

4. Do not apply for any credit cards, and if you have balances on your credit cards, PAY THEM OFF. It is not uncommon for a credit card balance to hurt your buying power. There are guidelines on the amount of debt that you can have without cutting into your ability to obtain a mortage at the desired amount. Going to a store and  obtaining a credit card for just that store for a purchase you intend to make is just as bad. Just wait.

5. Do not co-sign a loan for anyone, period.

6. Do not make any major purchases. That means wait to buy the car until after you have closed on your home, and wait to buy any furniture or appliances as well. If you have to make a major purchase, speak with your loan officer.

7. If you haven't already contacted a loan officer or a real estate agent, do so now.

8. Don’t change jobs, especially in today's teetering economy. A lengthy employment history with one company shows stability in your life and in your work. Believe me, that counts significantly.  A number of recent job changes even if they are in the same field does not look good on an application. Likewise, if you have only been at your current job for less than a year, it is not ideal as far as lenders are concerned.  Wait until aftter you close on your new home.

9. None of the above should change AT ALL until you actually have the keys to your new home in your hands. Do not apply for any credit between the time your loan is approved and the time that you close on your home, either. The bank will do a final credit check, and any inquiries at all are red flags. You will also be asked AT THE CLOSING to verify your original application and whether or not everything is correct on your original application. Heaven forbid something changed, and you didn't disclose it to the bank and major repercussions ensued. Just don't do it.

10. If you happen to be buying a home direct through the owner, NEVER give a deposit or  earnest money directly to that seller.

Lastly, and most importantly, don’t go through the process without the professionals that you need. That means an attorney, a real estate agent (that would be me!), a loan officer, and a building inspector.

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