Home Buyer Pitfalls – Part 3
This week we will conclude our Home Buyer Pitfalls series with part 3. We originally planned to share a 2 part series but, after talking with one of our preferred lenders, Brian Kempf with George Mason Mortgage we wanted to share some insight on what he is seeing buyers struggle with when getting their financing in place.
Excessive Use of Credit Cards – we’re all coming off the holidays and we know that’s the season of giving but, if you’re purchasing a home you have to be careful. Ideally utilizing 30% of your available credit is a good threshold to keep in mind. Brian cautions using no more than 50% of your available credit. If the proportion of balances owed is too high it can impact your credit score and in turn impact your home loan.
Moving Money Around Before Settlement- gift funds for a down payment are very common for many buyers and so is receiving money from overseas. The key factor is to disclose to your lender upfront that you’ll be receiving gift funds or money from overseas so that it can be properly sourced. Failure to do so can cause your loan to go off course, result in closing delays, or even worse be denied all together.
Opening New Lines of Credit or Making Big Purchases- when going through the home loan process it is not the time to open new lines of credit, new credit cards, or make a big purchase such as a car or boat. Opening new lines of credit can negatively impact your credit score. Making a large purchase will increase your debt to income ratio and can cause your loan to be denied. If you have questions about either of these scenarios while you’re going through the loan process reach out to your lender with questions before making any changes. They’ll be able to provide you with feedback and tell you if you need to wait until your loan closes.
If you have questions about purchasing a home in Northern Virginia we would be happy to answer them for you. Buying a home is a big decision and one that a lot of thought and consideration should be put into. With the right agent leading the way it will be a smooth and exciting process.