The Chicago Real Estate Minute

6 Checklist items home buyers must complete before purchasing

4 minute read

Banks are in the business of lending money. However, unlike before the mortgage meltdown when banks would give essen­tial­ly anyone with a pulse a suitcase full of cash, banks are under­stand­ably being more respon­si­ble with how they loan money — as they should be. If you’re thinking of buying, here’s our home buyer checklist, to help you out.

Check your credit

This vital step helps you to know what you can com­fort­ably afford. Plus, you may find inac­cu­ra­cies or things you weren’t aware of, which will allow you time to fix them. Despite the common myths, your credit score won’t take a hit unless it’s run several months in a row — which is unnec­es­sary, as credit reports are generally good for 90 – 120 days.

Pay off credit cards and other debt

Credit Card Card Wallet Money
lcb / Pixabay

Lenders are always looking at a buyer’s habits. Ideally, you don’t have any credit card debt — but if you do, get it knocked out before you make an offer. Never ever open depart­ment store accounts as credit bureaus look unfa­vor­ably at these, and be sure not to close any existing credit card accounts either as that may be detri­men­tal to your credit. 

Hold off on big purchases

Yes, home buying puts people into the “buying mood” for a lot of other things. That new car or deluxe bedroom set may seem like things you can’t live without, but buying them before you close can cost you dearly — in closing costs, interest rate, and stress levels. Wait until the day after you close before making addi­tion­al, big purchases.

Think before changing jobs

Farewell Say Goodbye Bye Road
geralt / Pixabay

If you stay in the same field and with the same (or better) wages, changing jobs shouldn’t be a big deal. But if changing indus­tries or com­pen­sa­tion structure (i.e., from salary to com­mis­sion) without two full years of tax returns to show your earning potential, your hope of ownership may be seriously delayed. And yes, the bank likely will verify your employ­ment several times, even on the day of closing.

Know what the lenders want

Banks will look at every­thing about you finan­cial­ly: income, credit score and credit history, out­stand­ing debts, assets and invest­ments, monthly expenses, and your debt-to-income ratio. Be metic­u­lous about how you handle your finances when planning a purchase. Also, be ready to explain any random or abnormal deposits that appear on your bank statements.

Check mortgage rates and closing costs

Your personal bank is one place to check with, but they may be limited in the kinds of loans they can offer which could adversely affect you given your specific situation. Mortgage brokers often have more options available, and thus poten­tial­ly could be more com­pet­i­tive on rates. Whomever you choose, decide on a lender the same way you want to choose a realtor, by getting a referral from someone you trust. 

Be sure to get the lender’s personal cell phone number as well — you likely will need to reach them after hours or over the weekend at some point. Online national lenders are notorious for making fantastic promises but lack the account­abil­i­ty that you will want from the person you trust with what will likely be your largest purchase. And always compare closing costs between lenders you speak with.

Final Word

No doubt there is a lot involved in this process. There is also little doubt that home­own­er­ship brings with it so many upsides. You probably knew that it wouldn’t be a simple walk in the park to get a mortgage. But it’s worth it. Follow our six home buyer checklist tips and it will make things a little easier.

House Mortgage Home Sold Real
mohamed_hassan / Pixabay

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