Buying a home for the first time is stressful, but there are things you can do as a first-time buyer that will help. Avoid these big mistakes when planning your mortgage.
Don’t Change Jobs Before Your Mortgage Closes
This advice does not apply to everyone, but it does for those who are contemplating changing the nature of their employment from having a boss and a traditional workplace to a freelance, contract, or per-project type work.
There are different FHA home loan rules for non-traditional employment, freelance jobs, commission income, etc.
If you were working in a typical job at the start of the home loan application process and are tempted to switch to contract, freelance, or commission work, your job switch could hinder your mortgage loan process since the income rules for those types of jobs require a two-year employment history, profit-and-loss statements where applicable, and proof of income in the new freelance/contract/commission work.
Don’t Skip The Home Inspection
Do NOT rely on the FHA appraisal alone to tell you the condition of the home. You will be disappointed, and you will not have help from the lender or the FHA if you skip the inspection and buy a home with defects that are detected after the loan closes.
Don’t Open New Credit Lines
…or close old ones. Opening new lines of credit makes your lender think twice about your debt ratio calculation and other factors. You want to keep your existing debt and your potential debt low.
Don’t Omit Things From Your Mortgage Loan Application
Some borrowers are tempted to strategically leave out certain information on a credit application because they fear being turned down for the loan. Leaving it off your application does not mean the lender will never know about it-the lender’s job is to see your entire credit picture and the loan officer has the tools to get that information.
Borrowers will see consequences by leaving out information on the credit application; it’s best to be up front about all your financial obligations (including any required alimony, child support payments, or student loans) and let the lender make the call.
Don’t Assume You Do Not Qualify For An FHA Mortgage
Talk to a participating FHA lender about your circumstances, your financial goals and needs, and see what options may be open to you. You may be surprised to learn that you have several options with an FHA mortgage.