Things to avoid:

1. Using your gross monthly income to budget your pre-qualification.

What does this mean? Your gross monthly income is the amount of income you earn in one month before taxes or deductions.

Qualifying for a certain amount doesn’t necessarily mean you can afford it. You do not want to find yourself in a position where more than half of your income that you depend on will go to your house payment.

Do your own due diligence before you speak to your realtor and figure out:

• Your net income
• Your monthly expenses

By understanding the wholistic view of your monthly expenses, you will have a much better idea of how much you can allocate towards a monthly payment.

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2. Be careful with your credit.

Now is not the time to do a hard credit check or apply for a new credit card. Your credit score needs to be in tip top shape during pre-approval and while you’re waiting for your conditions for financing to be approved by your lender.

Out of sight, out of mind. Keep your credit spending low or put your credit card in the freezer until after you’ve removed conditions on your home. Do whatever you have to do to ensure that your credit score isn’t negatively affected, as this will directly affect your debt servicing.

3. Don’t change jobs.

When buying a home, lenders and banks want to see that you are financially secure and stable. Switching or quitting your job can raise your risk of not being preapproved, which is why you should keep this in mind if you’re thinking about making a big career change or choosing to become self-employed.

4. Buy or lease a vehicle. 

You would be surprised how many people choose to lease or buy a car around the same time they are trying to buy a home. You might want it, but don’t do it. It’s best to delay major purchases until after your home closes so that you don’t interfere with your monthly commitment levels.

5. Don’t move money around.

It is wise to wait to make all big transfers and deposits after your home has closed. Lenders will typically scrutinize anything over $500 that is moved in or out of your account.

Your loan approval is conditional to the financial overview that you gave at the time of your mortgage application, and any changes you make in the interim will impact it.

6. Don’t miss a bill payment. 

Make sure to pay your bills on time. This might seem obvious, but it can greatly impact your credit score and jeopardize your chances of securing a mortgage. Ensuring that you pay your bills on time will be especially important once you have a mortgage, as there are serious penalties for missed payments.

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At KV Capital, our experts will take the time to explore suitable financing options that meet your needs and our team will assess your unique circumstances and preferences to identify the most suitable financing structure available.

We encourage you to reach out today to speak with one of our experienced team members and learn more about how KV Capital can support you in your real estate financing journey.