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REAL ESTATE 101 - Your Money Some Good Money Tips
Like it or not, purchasing a home cannot even begin without considering our money.
Savings or other financial means are often required and in some cases, additional financial adjustments will be required in preparation of your most important purchase in your life-your home!
This process can certainly be more daunting if it happens to be your first home purchase! If you are saving and watching your money as you search for your dream home, here are some important things NOT to do........ Mortgage experts advise you not to move money from one account to another, don't close or consolidate your accounts and don't even open new accounts, and most importantly, don't switch banking institions before you apply for a home loan. There are important reasons why you shouldn't monkey with your finances before you submit that all important mortgage application: In our experience, we know that when a lender reviews your loan package, one of the most important things they are concerned about is the source of funds for your down payment and closing costs, etc. Of course, we all expect to be asked to provide statements for the last two or three months on any of our liquid assets when applying for a home loan. Accounts under scrutiny usually include most banking accounts such as checking and savings, money market funds, certificates of deposit, stock statements, mutual funds, and in some cases even your company 401K and retirement accounts. So, imagine what loan officers might be thinking to see you are moving money around as if struggling to come up with the down payment. Now we know you may frustrated with your lender for requiring so much paperwork to fulfill your mortgage application but keep in mind they are just doing their job and in some case, what is required by regulations. Part of your lender's job is to track your accounts: deposits, withdrawals and other transactions such as moving money between accounts, etc. And remember: all financial institutions are required to document all sources of funds. Other things we think you might consider.........
Be very careful to keep your debt to income ratio low. This simply defines the finances left when you pay all you monthly bills. Simply stated, if you are considering a home purchase, resist the urge to make purchases on credit, keep you credit card balances low, for some, this might even include lowering utility bills, etc. For some folks, this means no new car, and for others a whole new budget may be required. Some experts even advise against making any large purchases during the time of applying for a mortgage. Okay, so you've already thought of all this important stuff-good for you! Perhaps you were even considering a job change~perhaps for a more attractive salary. Gotcha! You see, some lenders might look down on the fact that you just started a new job or that your new salary is largely dependant on commissions. Experts warn that changing jobs or even careers could have disastrous affects on your mortgage application itself. And of course, it would be advisable to hold off your plans to start a new business, at least until after you purchase your new home. New business owners tend to deduct a lot of start-up expenses at tax time and this creates less income for the lender to calculate. And lets face it, do you really need the added stress of a new job piled on buying a new home? Of course not!
If you would like us to explain all this real estate information for you, please give us a call!
At Homestead Realty, Inc. we can help you!

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