Buying a house can be difficult even if you aren’t a first-time buyer. There are many things that can go wrong during the house-buying process, from making an offer to closing to buying the house.
Buyers need to have a plan for avoiding common mistakes in today’s highly competitive market. While knowing the right things to do is important, it is often more important to be aware of what you should not do and what to avoid.
These are the 5 things that you should avoid before buying a house in Atlanta.
1. Resign from your job or make a career change
You must prove your employment and show consistent employment when applying for a mortgage. Before you buy a home, you shouldn’t change careers or quit your job.
Job changes can cause lending problems, especially if you change from salary to compensation.
This requires a longer track record, usually two years, when it comes to the commissions. Lending headaches can also arise when hourly earners have their hourly income fluctuate based on their work hours.
Financial experts suggest that you have a consistent employment history of at least 2 years with the same employer or in the same field of work.
Your lender won’t be concerned if you switch from one accounting firm or another while working in accounting.
2. Maximize Credit Card Debt
You shouldn’t take out too much credit card debt before buying a house in Atlanta. Experts say that maxing out your credit card debt before you close on a home loan is one of the worst decisions.
The problem is that the increased debt and concomitant payments can impact your debt-to-income ratio.
This will result in a lower mortgage financing eligibility. You might be charged more for your loan because of the lower credit score.
Industry pros say that “for the best mortgage rate, and in the interests of keeping debt levels low, try to keep credit utilization under 30% of your total credit limit.”
This will increase your credit score, decrease your debts, and help you qualify to get the best home loan possible.
3. Finance a Large Purchase
You should avoid any major purchase requiring financing before purchasing a house. Don’t rush to buy that car you’ve been eyeing for months or the kitchen appliances your wife has been begging for.
Borrowing money to finance a large-ticket item, such as a boat, wedding, or vacation, can make you appear less attractive to lenders.
These “activities” are a no-no as lenders will conduct a final credit inquiry before closing. If new debts were added, it could affect loan approval.
4. You can search for a house before you get pre-approved
You must get pre-approval for a mortgage before buying a house. You could end up disappointed.
These are just a few factors that make pre-approval so important.
If a potential buyer finds a home they like and then attempts to get pre-approved for financing, it is possible that the house will be sold before they have even finished getting pre-approved. Sellers want to sell their house only to serious buyers and will request a pre-approval from the buyer.
Pre-approval will allow you to know what amount you can borrow and how much house you can afford.
The pre-approval process involves contacting a lender to verify your income, credit history, assets, and financial statements.
A lender will only approve you for a loan on your home if you have verified these documents.
5. Consider that you will need to pay 20% down
One last thing to avoid before purchasing a house in Atlanta: assume that 20% of the purchase price has been paid.
That used to be the case, but it is no longer true. Don’t let this assumption stop you.
While 20% down can have certain benefits, such as allowing lower monthly mortgage payments, it is not a requirement for buyers today, particularly first-time buyers.
These options include:
VA Loans – 0% Down
USDA Loans – 0% Down
FHA Loans – 3.5% Down
You can still get a conventional loan today with as little as 3%-10% down, but you’ll need to purchase private mortgage insurance.
Waiting until you have 20% down can delay your home purchase timeline by many years. The longer you wait, the more expensive the home you will be chasing.
This likely means that you will need a larger down payment.
What to do before purchasing a home in Atlanta
These are just 5 of the most important things you should do before purchasing a house in Atlanta.
But there is one thing that every buyer ought to do. Working with an experienced agent in your Atlanta is important.
Local agents will be able to provide you with a detailed understanding of the market and help you find the right deal and house for you.
If you are interested in buying a house, contact us at 678-337-1165.
Ask our agents about our Rent To Own Programs. With our Rent-to-Own Homes, you will be able to start living in your Dream Home while you prepare to become mortgage-ready call us 678-337-1165.