Life happens and, while you can't control any outside forces, there are several things that you need to actively avoid when you are planning on buying a new townhouse.
1. Quit Your Job
You may have the worst boss in the history of the world, but you cannot quit your job during a house hunt. Banks and other lenders are looking for stability. How can you be expected to make your payments if you can't hold down a job? The exception to this would be a lateral move or promotion within the same company.
Please note, however, that your debt-to-income ratio would more than likely be determined by your previous position's rate of pay. Your debt-to-income ratio is your total debt compared to your gross income (before taxes). Most lenders do not want your debt to exceed 43 percent of your gross income.
2. Ignore Your Credit
No matter how much you ignore a problem, it will not just disappear on its own. This includes any credit issues you have. Do not ignore your credit score. Instead, you should be actively working to delete any errors on your report, pay off any old debt, pay down any recent debt, and improve your score. Face any credit problems you have head-on with the help of your mortgage broker.
3. Run Up Your Credit Cards
It can be tempting to buy new furniture, art, and electronics when you are planning to buy a new house. That new debt, however, can unnecessarily skew your debt-to-income ration right before closing and the underwriting department may start asking questions.
A better choice would be to pay cash for those purchases. In fact, if you avoid using your credit cards and postpone any and all large purchases until after you close on your new home, it would be wise to do so.
4. Buy a New Car
While buying a new car is an installment loan, not revolving credit (credit cards), it should also be avoided until after you close on your new house. Even if your current car is falling apart, do what you need to do in order to postpone that purchase until after you have the keys to your new home.
The exception to this, of course, would be if you were trading in an expensive car for a more sensible one with a lower payment. Not only would it improve your DTI, debt-to-income ratio, but it would also show banks that you are serious about debt and financial responsibilities.
The key takeaway is to treat your mortgage application like the most important event in your life right now. Every single thing you do needs to revolve around protecting that mortgage application, your credit, and your DTI.
To learn more about buying a townhome for sale, contact a real estate agent in your area.
This website can serve as your home for information about real estate. Here, you will find articles about the buying process and others on the selling process. We've also included content related to getting a mortgage, finding a real estate agent, and scheduling an inspection. We hope that by addressing all aspects of the real estate world, we will make you better prepared to handle any real estate transactions that might be in your future. After all, real estate can be a really smart investment, but only if you buy the right home and know how much to offer. Start reading, and enjoy what you find.