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Buying Advice

10 Important Things to Consider Before Applying For a Home Loan

Are you considering purchasing a home? Whether you are a first-time buyer or have purchased many properties there are many things to consider.

Did you know that certain things can both positively and negatively affect your ability to obtain financing? I recently sat down with a lender who was kind enough to share some tips with me.

10 Considerations Before You Apply For A Loan

  1. Do not transfer money between accounts unless you will be able to provide itemized documentation from your bank.
  2. Do not make unnecessary checking or savings account transactions. Keep it simple. If you are asking to borrow money from a lender they will want to make sure that you are as financially stable as possible. When you start transferring money frequently it can raise red flags.
  3.  Stay put. If you have a job stay there. Lenders will want to see a steady employment history.
  4.  Keep your bank accounts in the black. Even if you have overdraft protection, it will not reflect well on you if you let your account become overdrawn. Lenders want to see you can handle your money well and are responsible.
  5.  Do not take out a cash advance or apply for any credit in any form. This includes loan consolidation, new cars, furniture etc.
  6. Do not co-sign a loan for a friend or family member even if you know they are good to cover the loan. Bottom line– you are still responsible if for some reason they can’t make a payment and that is the way a lender will look at it too.
  7. Do not ask a tenant to move out or give your landlord notice that you are moving out.
  8. Make sure to pay ALL bills on time. This includes utility bills.
  9. If you have bills in collection or are disputing accounts, check with your lender about the best way to handle these as it can both negatively or positively affect your credit score.
  10.  If you plan on having a friend or family member help with ANY aspect of your home purchase (earnest money, down payment, etc.) make sure to talk with your lender BEFORE doing this as these can be considered gifts which are only allowed under certain circumstances and have to be handled properly or it could negatively affect the loan application process.

The Bottom Line

If you want to borrow money from a lender then you need to be the person that you would lend money to. Think like a lender before you do anything and understand that it is all about how you look on paper. Lenders like to see consistency where your finances are concerned.

There are many different types of financing out there. They range from conventional, investment property, USDA, FHA, HUD, and VA Loans.  If you are thinking about buying a home one of the first steps you should take is to find a lender that you are comfortable working with. Find a lender that will take the time to go over all of your options and advise you of the best way to move forward. If you are ready to take the first step towards buying a home, I am ready to help.

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Karen

August 28, 2017

Awesome info. This helps a lot. Keeping things simple! I’ve been self employed for nearly two years but in the same industry for 24 years. How would a lender look at that? Same criteria?

Linbda Hussey

August 29, 2017

Aloha Karen and mahalo for asking.

Because every situation is unique, I am happy to refer you to the Lender that provided the information to me originally. This way we will insure that you receive the most up to date information and guidelines. With your permission I will pass along your email and have her respond to you directly.

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