Massachusetts Home Buyer Guide

Massachusetts first-time home buyers, and really any home buyer, should keep in mind that certain personal and financial moves may hurt their chances of, or disqualify them from, obtianing a mortgage loan or delay their closing. Several seemingly innocent financial or personal changes by a borrower during the loan process may have unintended consequences. The following are 12 things a potential home buyer should not do when seeking a mortgage. 

1. A home buyer should not change jobs, become self-employed or quit his or her job. If you change jobs, especially careers, you may have to wait a certain amount of time before you will qualify for a home loan again. Lenders typically want to see a two-year employment history within the same field. Even if your new job is in the same field, a lender will want at least one paystub to verify income at the new job, so changing jobs just before closing may cause delays. 

2. A home buyer should not purchase a car or make any other large purchases. It doesn't matter how many miles you have on your car, such a purchase during the loan process is a bad move. It could result in a lower credit score, change your debt-to-income ratios (thus disqualifying you for a mortgage) and/or reduce the amount of the loan you qualify for. 

3. A home buyer should not spend money they have set aside for closing. Most conventional loans require two months of reserve money to be verified in your available financial accounts. Once those funds have been verified for use at closing, spending these reserve funds may result in loan closing delays or even loan denial.

4. A home buyer should not co-sign a loan for anyone. During the loan process, any changes to your credit report or status could negatively affect your ability to close your loan on time or at all. Cosigning a car loan, student loan or other types of loans could result in inquiries on your credit report and additional financial responsibilities.

5. A home buyer should not use charge cards excessively. This mistake is similar to No. 2 above because it could result in a change in your debt-to-income ratio, credit score and/or change the loan amount you qualify for.

6. A home buyer should not omit debts or liabilities from his or her loan application. Sharing all necessary information honestly with your lender will prevent delays or surprises down the road. Having the correct information will allow your mortgage professional to provide you with the best loan program.

7. A home buyer should not buy furniture, appliances or household items before closing. 
Although you may be anxious to furnish your new home, don't do it during the loan process for the same reasons stated in No. 2 and No 5. above. Just before buying a home should be a period of spending less and saving more. 

8. A home buyer should not originate any inquiries into there credit. As mentioned above, multiple inquiries into your credit may result in a decline in your credit score. Applying for car loans, department store credit, additional credit cards or any lines or credit could negatively affect your ability to qualify for a home loan.

9. A home buyer should not make large deposits without first checking with their mortgage
professional. Unusual deposits or large deposits into checking, savings or any financial accounts beyond normal payroll deposits must have the source of that money verified by a bank's or mortgage company's underwriting department. Such deposits could result in loan processing delays or even denials. It isn't OK for your family or friends to just give you money a few weeks before the closing. Even moving money around accounts may cause a problem, so be sure to discuss with your mortgage professional before making any money moves. 

10. A home buyer should not change banking institutions. Because the loan process requires a two-month history of reserve and closing funds, opening a new financial account near a closing date may void this history. New bank accounts will not have the two-month history available and cannot be used. This too may result in loan closing delays or even denials

11. A home buyer should not make late payments on any accounts. This should be obvious, but home buyers need to be aware that their credit score will be checked again, usually within a week of the closing date. Any negative information reported to credit bureaus may result in a delay of the closing or a denial of the loan, even if you already have received your loan commitment letter. 

12. A home buyer should not change their name. Many engaged couples search for homes before their wedding and sometimes get married in between the offer getting accepted and the closing. Although one may have a burning desire cut the number of letters in their last name in half, having a different name at closing than you had when you filled out the loan application will likely result in delays.

The mortgage loan process may seem daunting for the first-time home buyer, as well as an experienced home buyer, but an experienced buyer agent and mortgage professional can help guide you through the loan process in an efficient manner and with as little stress as possible.