Thinking about buying a home can be a very exciting time but when it comes to financing the home, that might come with a little less excitement. Purchasing a home is a big deal and whether you are pre-qualified or just getting started on your search for a home, it’s always a good idea to stay educated on the home loan process.

1. Payment History is Key

Payment history is a key component to determining your credit score and qualifying for a loan, so it’s important to keep up to date with all payments and financial responsibilities. It’s also a good idea to make sure you aren’t spending too much than you can pay back on a timely basis while you are in the process of qualifying for a loan.

2. Stay Away from Large Purchases

This may seem like an obvious thing to do but, it doesn’t hurt to mention, especially since the definition of a “large purchase” can vary from person to person. If you are making a large cash purchase, that will take away from funds needed for a down payment or closing costs. If you are making a large credit purchase, that could affect your debt-to-income ratio and make it more difficult to qualify for a home loan.

3. How to Handle Lines of Credit

Another thing you should avoid doing is opening or closing any lines of credit. Whether you are opening or closing a line of credit throughout the mortgage process, it could negatively affect your credit score, in turn making it more difficult for you to get approved. Some may think that being pre-qualified means you will easily be approved, but that is not the case since your credit can be pulled at any point through the application process so it’s best to keep up to date with your payments and not increase spending.

4. Avoid Large Deposits

If you plan on making any large deposits, it’s best to do so while you are not applying for a home loan since any major deposits will be scrutinized by most lenders. If you make a deposit of a notable sum of money, you will have to provide an explanation of the funds and that can slow down the approval process. If you happen to be receiving a gift to help you pay for the home as a down payment, it’s a good idea to discuss this with your loan officer at the initial point of your application so they can avoid issues down the line when processing your application.

5. Employment Status Matters

If you’re thinking about changing career paths or starting a new job, it’s a good idea to wait to do so until after you’ve secured your home loan. Your employment history is something that lenders will usually take into account in determining your eligibility, so having a steady history and secure employment will make it that much easier on you to get approved.

Give Us A Call Today!

We know that finalizing the funds for your home can be a stressful process, but we are here to help. Reach out to our team at North Star Mortgage Network so we can assist you in getting your loan approved today!