What to do….and what NOT to do when considering the American Dream! (Part 2)

Today, we shall continue with part 2 of our post from John Haid, a mortgage lender with C& F Mortgage to write to us today about the Do's and Don'ts when considering the purchase of a new home.

If you missed what TO do, click here.

And now we continue with what you SHOULD Not do.

What NOT to do:

1. As mentioned above, NO big purchases! Get the house out of the way then furnish it, replace the car and anything else later. Big purchases could change the loan you qualify for or the amount that you will be able to qualify for very quickly. Every dollar in debt takes away a dollar from what you have in payment towards your home. So you are taking away the amount you will be approved for.

2. Don't go beyond your boundaries (aka - ‘don't worry about keeping up with Jones'). You might qualify for a lot more then you really need to spend. In some cases it might make sense to try to qualify for as much as you can for you are just starting out in a new career and you know you will be making more money over the next couple of years. In many cases though, especially first time home buyers can qualify for more than they need. If you are paying 1500 in rent and are comfortable, then try to stay in the realm. $1600 will get you around $250k in mortgage. More than enough to get you in a good starter home. Remember that is what it is...a starter home!

3. Don't go running around looking at houses, until you get Pre-approved! Time and gas is expensive and you don't want to put yourself falling in love with the house that puts you in the above point (#2), getting a house you can't afford. Find out what you qualify for and stay in that market. Also as said, get Pre-Approved. The letter you get in the mail saying you are "pre-qualified" for $XXX does not mean a darn thing, in fact you may not qualify at all. A good lender will gather all the details and run your information through an electronic underwriting system (DU or LP) to give you a solid pre-approval.

4. Yep it is sounding redundant but don't spend so much on the house that you cannot keep the proper upkeep on it going forward. It is easy to say yeah this is no problem to afford this house, but what happens when you get that repair bill for the central air because you decided to cut back on getting it serviced every year for 3 years for it saved you $300 or a total of $900 (btw that is only 25/mth.). Now you have a $5000 repair bill and an upset family for AC always breaks when it is 100 degrees out and they cannot come to service it for 2 weeks...oh and the part they need is back ordered and will take another week. Yes, been their done that and will not again!

In summary it is all pretty common sense points, but the most important is to get in touch with a lender now, so you can find out if you qualify and if not what you need to do so you can in the next few months.

Thank you, John, for these great tips! For more information on how to raise your credit score or to see if you qualify for the purchase of a home, please consult a reliable mortgage institution.