The 10 Commandments of Financing a Home

Is there anything that makes you feel more like an adult than spending huge chunks of money? Paying bills, paying taxes, all those things just really give me #adultingishard vibes. Strangely, paying my mortgage feels like such a win! It’s definitely a big responsibility, but I know I’m investing in my own equity as a homeowner every time I make that payment and it feels so good.

The average homeowner has a mortgage because a lot of us don’t have hundreds of thousands of dollars lying around to pay cash for a house, and in order to get that mortgage you have to be approved for financing and show your lender that you’re worthy of their trust. I can’t tell you the stories I’ve heard about deals falling apart and buyers losing the home of their dreams because of a silly choice or mistake that could have been prevented, but I can tell you that I do NOT want that to ever happen to you! When you’re ready to apply for a home loan, just remember to never break the 10 Commandments of Financing a Home, and ye shall be blessed with the promised land.

1. Thou Shall Not change jobs or become self-employed.
   Helloooo red flag! Lenders do not like to see changes in employment while they’re underwriting your loan, because if your financial situation is changing then your ability to pay your loan could change. If that headhunter promising a fancy new job really wants you, just tell ‘em to wait 60 days until your loan closes and then you can spread your wings and fly, but not one moment sooner!

2. Thou Shall Not buy a car, truck or van unless you plan to live in it.
   No big purchases at all is a good rule of thumb, but big purchases that you also have to take out financing for are a real deal-breaker. If you want the white picket fence, the wheels are going to have to wait!

3. Thou Shall Not use your credit card needlessly or fall behind on payments.
   This goes back to that whole trust thing I mentioned earlier. Your lending team wants to see that you’re a responsible adult, and #adultingishard, but keep making those payments on time and show them you can do it!

4. Thou Shall Not spend money you have saved for your down payment, get a gift for closing or take out a retirement loan without first consulting your mortgage consultant.
   If there is something you really feel like you need to spend money on, like buying your spouse a housewarming present to celebrate your new home, the answer is probably no. But, don’t be afraid to ask me or ask your lender. We’re still going to say no for your own good, but then you at least have someone else to blame it on if you need a scapegoat for delaying the purchase of your new Bernedoodle puppy.

5. Thou Shall Not buy furniture before you buy your house.
   If you want a place to put said furniture that has four walls and a roof, then don’t buy it until you close on your home. Spending hours picking out living room layouts on Pinterest and favoriting everything on IKEA’s website is allowed though, and even encouraged! (Can you tell I love interior design?)

6. Thou Shall Not originate any new inquiries on your credit report.
   That means don’t apply for any new lines of credit, don’t check your own credit score, just pretend your credit is in the witness protection program and don’t let anyone ask about it until your loan goes through.

7. Thou Shall Not make any large deposits into your bank account unless you plan on documenting that deposit and origin of the money (basically anything not payroll related).
   Surprised you with this one, didn’t I? As much as the underwriters on your mortgage team hate to see large quantities of money leave your bank account, they also don’t want to see them entering it out of nowhere. If grandma wants to gift you $5,000 toward your down payment, write her the nicest thank you note ever and ask her to please send a check before you complete your loan application.

8. Thou Shall Not change bank accounts.
   This makes it hard for your lender to keep track of important stuff, and the timing just looks a little fishy. Fishy is not what we’re going for here!

9. Thou Shall Not co-sign for anyone
   If you’re trying to qualify for your own loan, the last thing you want to do is co-sign on someone else’s loan. This is such a nice thing to do for your kids who are buying their first home and haven’t built up their credit enough to get a loan on their own, but don’t do it to the detriment of your own financing!

10. Thou Shall Not purchase anything until after closing.
    Did you notice how I slipped this one in here in about five different ways but they’re all really saying the same thing? Just don’t spend money until you spend money on your down payment and closing costs. The underwriters for your mortgage company are going to be watching you like a hawk for about 60 days, so outside of standard essentials like groceries and gas, lock up that credit card and checkbook and throw away the key. After you close, we can have a party and I’ll come help you find the key and approve all of your IKEA furniture choices! Yay!