 see at least 2 years of self-employment. Keep in mind that this means 2 years worth of tax returns, which really means you probably have to be self-employed for more than 2 years in order to provide a full 2 years worth of returns. ** also, income is determined based on the 'Adjusted Gross Income' (after your deductions) ** Wait until after buying a home to become self-employed.
Changing jobs to a'sales' environment is also risky while you are considering a home purchase. Even though the position you accept is not considered'self-employment' is it still sales based. If you were receiving a salary prior to your new'sales' job then you will need to show 2 years worth of sales income. Being in a sales position has similar considerations as being self-employed.
Moving Money Between Accounts - I mentioned this in an example above. When a lenders underwrites your loan to determine your eligibility, they will request complete statements (yes, even the blank pages) from your accounts that contain liquid assets. When you move money around between these accounts, especially if they are large amounts, you will have withdrawals in some and deposits in others. The lender will want to see documentation for these transactions. Most people do not keep all of this paperwork, so it's much easier to leave the money in the accounts until after you have purchased or refinanced your home.
Change Banks - This pretty much ranks up there with'moving money'. It just creates additional paperwork for you and the lender. The more paperwork, the more likely issues could arise for your home purchase. Not only could there be questions/concerns from the lender, but it could cause unnecessary delays in closing your loan. Stay with your current bank until the mortgage process is complete.
Make a Large Purchase - A large purchase is not just about a car or boat. Now that you are moving into a bigger place, you will probably want to fill it with furniture... and that 'One Year Same As Cash' deal sounds really tempting. Resist the urge to purchase that new sofa set until after you have obtained the mortgage. Again, this is for two reasons. First, it could affect your credit scores and debt-to-income ratios. Secondly, remember that you are not done buying a home until the loan closes. There are no guarantees until that happens. Unfortunately, there are a number of things that could happen which results in a declined loan application. Contact your local mortgage professional to help you avoid any costly mistakes.
Apply For a Credit Card - Although this is the last item I mentioned, this is equally as important. The new credit card won't hurt your credit score too badly if you already have good credit, but it will cause the to question your financial stability for buying a home. For the time being, don't apply for no interest credit cards or department stores. After you are settled into your new home, there will be plenty of time for shopping.
In summary, when you are buying a home or refinancing your current mortgage, it is best to stay away from anything that will look as though you don't have your finances under control. The items above are just a few examples that could cause such a determination.
John, This is great advice for home buyers...now if only you could be sure they will adhere to these tips!
I'm in total support. Yes, essentially, when they put their lives on hold, they are essentially telling me that this is priority to them. I want to work with these clients. Please share them with me.
If it's okay with you, I want to steal your thunder and write a similar post and relate that more in line with my side of the business. Sounds cool?
Great information for people thinking about buying! I usually have the "don't buy furniture" conversation with buyers when we place a contract on a home.
Excellent, excellent. Every home buyers should read this and every agent who doesn't already do so should provide this informtion to their buyers.
I can tell you though that, no matter what you tell a buyer, if there is a sale, it's hard to keep them out of the mall.
Or, if they were in the market for a new vehicle before they signed the contract of sale, it's hard to keep them out of the auto showrooms while waiting for settlement.
John - very well put and great advice! We have been fortunate so far not to run into this problem between application and closing but there will be a first time I'm sure! We do have the similar conversation with our buyer clients but many people are stubborn and think they know best. I'm throwing my hat in the ring with Loreenas in asing for these clients from you also - share them with me too!!!
ps I'm going to reblog later!
If you don't mind...I am going to print this and give it to all my potential buyers!! What great information!! I actually just had a closing postponed because my client didn't believe the lender when she told him not to move money (he constantly transfers money between his accounts). Uggggg!
you know even after I have told clients not to do this or that....guess what????
Great post - thanks for sharing...one more thing I have been told recently is not to close or pay off any accounts before checking with your LO. 
Wanda - All was can do is share the information with the buyers/homeowners and repeat it a few times... hopefully they hear the message.
Loreena - If/When I have these buyers without an agent in Frisco, you are certainly the first person I will think of. If this post strikes an idea for you, please feel free to write the post. I find that many posts spark idea for me to write a post. Glad I can help.
Thank you Jason. So true about common sense. I think people hear the word 'pre-approved' or 'approved' and think they are free to do whatever they want. Obviously they are, but they run a risk. Better to consider this a priority and do nothing.
Tom - At least they waited for the closing. Heck, I'll drive them to the Roomstore if they are patient.
Pam - Its important to have the conversation and repeat it a few times in conversation. Not to beat a dead horse, but nothing wrong with friendly reminders.
Lenn - I have been there. Recently I had a customer who really needed to buy a truck for work. He had to wait... and wait.. and wait some more. Luckily, he waited until the day after he closed to go out and finish his shopping. He had it all picked out and ready to go. It was a matter of signing docs and sealing the deal on the truck.
Brian - I have you in my books as well. No worries there. I owe the next one to Loreena, but you are next on the list for sure. Thank you in advance for the reblog.
Jeanna - Feel free to share it with as many people as you would like. Its on the internet to be shared with many, not the few. Thanks for reading.
Gene - So true. You dont want them coming to you afterwards asking why you did not warn them. Better to say'remember when we talked about this exact situation'.  Hopefully they take your professional advice and no do anything out of the norm.
Cara - Yes and No. If they are paying off a bill, that won't hurt too much. For example, if they have an active collection or a loan. Typically, you just don't want to payoff and close an account. Paying a credit card down to zero is great. Paying it off and then closing the account... thats a "no no". Anything that will effect your credit in a negative way is not wise. When you close a loan, if should be a good thing but in many cases it has a negative effect first.
John - This is a great article. You should consider adding another item, "Disputing anything on your credit report". Fannie Mae now requires documentation the account is either; not the borrowers, or the item(s) must not show in dispute for AUS findings. We just did two re-scores for one of our clients to get this condition cleared for loan approval. The re-scores were even for the same account. Transunion called the creditor, the creditor didn't answer andthe request was not processed. Transunion still charged us for the rescore.
Thanks for the excellent advice. Our sons will eventually be wanting to buy their own homes. I'll have them review this.
This is GREAT advice for all buyers. I had one deal blow up because the buyer went and bought a new car the week before closing. I told him not to spend any money, but I guess I should have kept reminding him. Thanks again!!
Very well put. I am not sure why the general public is seemingly so oblivious to how they can potentially derail a real estate transaction with 'credit-affecting actions'. With all the commercials about free credit reports, you'd think they'd get it.
I'm glad you wrote this post. Maybe it will help!
Thanks for the post. I am going to bookmark it and send it to my clients. Hopefully, you aren't licensed in Arizona.
Congratulations on the feature John! Well-deserved!
Good info. Now we just need to make sure we keep the buyers informed every time when they are entering the state of mind to purchase.
David - We could have a very large list of things that could mess up. I was trying to stick to some pretty basic items for clients. I could see your point though if a person is in the process of disputing items. It can be quite a hassle.
Benita - Cars seem to be