Most people, including many first time buyers, are quite familiar with the things you should do before purchasing a home... you save some money for a down payment, closing costs and the like; you check your credit scores and clean up any credit issues if possible to improve those scores; you get pre-qualified; you start searching the net for that perfect house and you contact a realtor.
But what about the things you shouldn't do before purchasing a home? These things can affect your ability to get a home just as much, and in some cases more, than the items I listed above.
Don't Switch Jobs! Switching jobs may not be a big deal if you work an hourly or salaried position and can offer proof of your new employment along with what your new salary is going to be. It's even better if you can provide a few pay stubs from your new employer. However, if you're going to be working on commission or will be relying heavily on bonuses, then it's best to buy first and then switch jobs. The same goes for if you are going to become self-employed. In this case, lenders want to see your records from the past two years to verify your income.
Don't Make Any Big Purchases! A colleague of mine recently told me how a sale fell through because her buyer clients went out and purchased a new automobile. They had found a home, gotten pre-approved and had a closing date. Thinking they were all set with the house, they went and purchased the car. A day before the closing, they got word that the purchase of their new car changed their status and the lender would no longer give them the loan! You can imagine how disappointed those folks must have been!
Lenders often will continue to check your credit and review your loan throughout the purchase process, up to and including the day of closing. So resist the urge to go purchase that new furniture for your new home until after the closing! Similarly, don't take any expensive vacations, take out personal loans, or run up your credit cards, etc. And be sure you continue to pay all your bills on time.
Don't Move Your Money Around! When getting approved for your loan, the underwriter will be looking at your accounts. They want to see where the source of your down payment and closing costs will come from in addition to verifying your income. They are going to require some kind of paper trail showing where your money is and where it's been. Typically, they will want to see two to three months of statements for your checking and savings accounts as well as for any other assets you might have such as money market accounts, stocks, mutual funds, etc. If you've moved large amounts from account to account or even consolidated funds into one account, it becomes harder to document and the underwriter may question it. Switching banks may also cause a similar situation so avoid it until after your home purchase.
Don't Waste Time and Energy looking at homes with an agent or going to open houses until you talk to a loan officer about what you can really afford. Do your homework. Get pre-qualified or better yet, pre-approved. Find out what your monthly payments will be at different price points because for most people the monthly payments are really the bottom line as to affordability. Be sure to ask if that amount includes taxes and insurance even if it's just an estimate. Be honest with the loan officer about any potential credit issues that may affect your ability to get a loan. Nowadays, with an increase in foreclosures, many lenders are tightening their criteria for approval. Credit problems can also affect the interest rate you qualify for and that is a big factor in terms of your monthly payment amount.
Please keep in mind that I am not a loan office or in the mortgage business. I'm a Realtor. These are basic suggestions and I would advise you to consult your loan officer for more information on these items. Being informed and prepared will help make the home buying process a smooth one. And who doesn't want that when making one of the biggest financial and emotional investments of your life!