Buying a new home is exciting as well as stressful. While you are super enthusiastic about picking a great location for your new abode and designing its interiors, the financial stress associated with it can be quite strenuous. Assuming that you're planning to buy your dream house on a home loan, you need to keep a spic and span financial record to qualify for the loan and get a favorable interest rate. These ten commandments of getting a home loan can keep you straight and steady on this precarious financial path.

1. Thou shalt not change jobs, become self-employed, or quit your job

As a buyer, you must probably be concerned with various factors - the location of the new house, the interior design, the services available, the proximity to several conveniences, the price, etc. However, the lenders are primarily concerned with one factor - your consistency. If you have quit your job, and you are currently unemployed, you certainly aren't considered creditworthy as you do not have a steady income to repay a loan. The same applies to self-employed people - if you have recently ventured into a new business, there isn't enough data to prove that the business will flourish; hence, lenders wouldn't trust you with new lines of credit. Moreover, you might also end up raising red flags if you change jobs frequently or have an on-again-off-again employment schedule. Such career moves highlight your inconsistency, and lenders consider you a risk. It's best to stay put till the home loan is approved. Change your job after you change your mailing address.

2. Thou shalt not buy a car, truck, or van

Hold off on making sizeable purchases right before applying for a home mortgage. If you, for instance, buy a car on an auto loan just before buying a new house, the dream house may remain a dream, and you might have to live in the car instead. On a serious note, when you're already repaying a considerably hefty debt, potential lenders won't trust you with another. So, space out these purchases to make sure that you have your dream house as well as your dream wheels. This is one of the most important ones of the borrower commandments.

3. Thou shalt not use credit cards excessively or let current accounts fall behind

When you apply for a new loan, the lender checks your debt-to-income ratio (DTI) to decide whether you qualify for the loan or not. The DTI is an analysis of your monthly income and your existing debt obligations. It tells the lender if you are capable of handling more credit and paying more debt. Excessive credit card usage means that you spend uncontrollably; it indicates your inefficiency in handling credit. Failing to pay bills on time, on the other hand, reflects an irresponsible financial behavior - it warns the lender that you might not be capable of repaying the loan. Both of these habits not only affect your DTI but also ding your credit score to a considerable extent. Keep a clean sheet - pay all bills on time and do not open any new lines of credit.

4. Thou shalt not spend money that you have set aside for closing

Keep your hands off the amount you have set aside for closing. If you use it, you lose it. And if you lose it, you jeopardize your ability to pay closing costs. Stick to your budget plan and financial commitments. Howmuchever hard you might be craving for some new and shiny got-to-have-it-today thing, you need to keep the temptation at bay.

5. Thou shalt not omit debts or liabilities from your loan application

Honesty is the best policy - remember? Well, follow it blindly while applying for your home loan. Be fair and square; do not fudge anything on your loan application. We live in the age of technology, where the internet makes sure that nothing remains hidden. Whether it is an unpaid telephone bill or a tiny glitch in tax payment, a couple of clicks can get the lender all the information he needs. And if you're caught in some funny business, you can bid adieu to your dream home.

6. Thou shalt not buy furniture

A new couch, some fancy chest of drawers, a chic coffee table, a grand chandelier - when you're about to buy a new home, all such attractive furniture and interior decor might catch your attention. While there's no doubt that these items will look fabulous in your new-home-to-be, yet you must remember Commandment 3. Do not splurge. All these goodies can wait.

7. Thou shalt not originate any inquiries into your credit

Hard inquiries take place whenever a lender conducts a check on your credit while making a lending decision. So, each time you apply for a new line of credit, a hard inquiry happens and knocks a few points off your credit score. A hard inquiry appears on your credit report and remains for seven years. It is an important decision-making factor for potential lenders. A single hard inquiry might not be very appalling, but a bunch of simultaneous hard inquiries can be serious. Take care and make sure that you don't invite unwanted hard inquiries when you are applying for a home mortgage. If you urgently need to see your credit score, get a free copy of your credit report from any one of the credit reporting agencies. If you spot an error on your credit report, file a dispute and immediately get it rectified. Your loan request could get rejected due to errors or unnecessary hard inquiries.

8. Thou shalt not make large deposits without checking with your loan officer

What if your Grandpa gifts you a large sum of money to help you with the down payment? Isn't it a great relief! Well, it may not be so. The lender might get suspicious if you suddenly slam down an extra lump sum amount that's more than 50% of your salary towards the down payment. They might assume that you have taken another loan. If you really get into a similar situation, you must ask your grandpa to write a gift letter to the lender; the letter must declare the relationship between the two of you, the total amount of money gifted, the transaction date, and a statement from your Grandpa saying that he is expecting nothing in return.

9. Thou shalt not change bank accounts

You might hate your bank or credit union and desperately want to switch over to a new one. However, with your loan application under process, jumping ship isn't a great idea. It might cut your access to your recent bank statements and prevent you from printing proofs of your income, spending habit or identity. It might upset the entire mortgage process. Be calm and keep your patience - tolerate your current financial institution until you cross the threshold of your new home.

10. Thou shalt not cosign a loan for anyone

When you cosign a loan with someone, you essentially promise to fulfill the financial obligation if the main borrower defaults on the loan. Cosigning a loan is never a great idea. An unanticipated expense can wreak havoc in your finances and curb your ability to pay your own home loan. Would you want to risk foreclosure on your own home if a distant cousin defaults on his auto loan?

To Sum Up

Now that you know what to keep in mind and what to look out for, follow these ten commandments, be confident and apply for your home loan. If you don't budge from these ground rules, you are sure to get a thumbs-up for your home loan application.

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