When you are trying to buy a home in North Texas, or you are trying to buy a home in the DFW area, or ANYWHERE, please keep these rules handy. Print them out. Memorize them. Have your spouse memorize them. Make flashcards. Quiz each other on a Friday night. These basic rules have been used for years by real estate agents and real estate brokers all over the country.
Rule 1. Don't turn into a millionaire with your spending habits. Now is the time to be frugal and responsible. My parents always taught me, if you use a credit card, you pay the balance EVERY month. Don’t EVER pay late. Why? Because when you try to buy a house, and you have missed a credit card payment by three days, one time last year….well, the bank will assume paying your bills on time is not a priority for you…so why should they put their money on the line for someone who can’t pay a credit card bill on time or is wasteful with their spending?
Rule 2. Don't become an entrepreneur. No matter what your brilliant idea is, now is NOT the time to change jobs, become self-employed, or quit your job….unless of course, you have a big pile of money buried in the backyard. When you go to get pre-approved for a loan, banks will look for reasons to reject you. The perfect reason is someone that can’t keep a job (because this is how they will see it) or has no stable income.
Rule 3. No large purchases. You don’t have the house yet. Refrain from heading over to Ashley Furniture or surfing Wayfair. Don’t jump the gun. It will jinx you. Every time.
Rule 4. Don't apply for credit cards to save yourself $7.00 on a $700.00 purchase. When you do this, they hit your credit to see if you are trustworthy. The mere act of this, makes you look UNTRUSTWORTHY to a bank. The more inquiries you have, the more you appear sketchy. Banks don’t like sketchy. Only they are allowed to be sketchy.
Rule 5. Don't touch your savings. Leave it buried in the flower bed in the backyard until closing. I know it is tempting...calling your name in the middle of the night...don't touch it. You will need it later. Remember Grandma's rule: Keep your hands out of the cookie jar.
Rule 6. Do not make large bank deposits without checking with your loan officer. This is a simple phone call. Before you put Grandma Mae’s $50,000 birthday check to you into your checking account, text me her phone number so I can become her friend, THEN call your loan officer. Why? Because the banks will assume you are smuggling drugs for a drug lord. When you explain that it is a gift from Grandma, they will make you fly her in from Florida, and demand she comes into the bank and signs 42 papers (without a lunch break)…but not after proving that was her money from the start. Then they will need all of her financials to see what else she has...because they will probably want to be her friend too.
Rule 7. Do NOT change bank accounts. You will look like you are trying to hide something. We all get frustrated with banks at times, now is not the time to throw in the towel and prove you deserve better. Do that after closing. When you are trying to get a bank to loan you money, you love ALL banks. All banks come over for Christmas dinner and are the Godparents of your children. Paint that face on and keep your cool until this process is over.
Rule 8. Do not keep secrets from your loan application. List ALL debts and liabilities on your loan application. Why? Because they will find out. They always find out. They know everything. Trust me. Be forthcoming…it will be easier in the end. You may be in the doghouse when your wife finds out you purchased a $5,000 new motor for your Mustang...but at least you won't be depending on that $5,000 motor to keep you warm at night when she kicks you out for losing the house of her dreams for keeping secrets from the loan officer.
Rule 9. Don't be a hero. Don't co-sign on a loan for ANYONE. When you do this, the bank counts this against you. They have to assume that even though your little sister has never once been late on her car payments, that she will stop paying tomorrow. So that monthly payment, will again, be money YOU won’t be putting towards the house.
Rule 10. Don't buy the new Audi R8 or any other vehicle...and if you do, make sure a mattress will fit in the back because there is a good chance it will be your next home. When you make a big purchase like this, the amount of money you owe on your new vehicle is noticed by the bank, and they will take that into account when they loan you money. If they know you are making an $800 a month car payment, that is $800 you are NOT putting towards the home you are trying to buy. They also see what you owe on that vehicle…it all goes against the number you can pay each month. You don’t want to appear frivolous.
Banks that you are trying to get a loan from are pessimists. They will look for any and every reason to hold you up. Don’t give them that gratification. Make life easier for yourself, your realtor, and your loan officer. You can thank me later.
Talk to you soon!
- Your Top North Texas Real Estate Agent - Brenda Debus