BlogHomebuyingFinancial IQFeatured September 23 2021

7 Surprising Things First-Time Homebuyers Should Never Do, According to Loan Officers

Insider advice on how to make sure your first home purchase is a success.

Lennar Mortgage loan officers Rachel Alcaraz (NMLS #946629) and Haley Aivazian (NMLS #1512517) have seen it all: They've seen families go from renting tiny apartments for years to experiencing the dream of buying a brand-new home in just months. But they've also seen deals delayed, complicated, and even blown completely when unsuspecting new buyers make innocent mistakes.

"It is so important for a buyer to have a good relationship with your loan officer," Rachel says. "We're spending anywhere from 30 days to six months with a customer, and during the time they are in escrow, a lot can change," she says.

This is why knowing which financial moves and purchases to make or not make is crucial, Haley adds. "Prices are continuing to skyrocket, so the better your FICO scores, the better your rate and payment will be which will make a home more affordable. Knowing what pitfalls to avoid and what little tricks and decisions to make can really impact how smoothly the process goes, and how much you end up paying over the life of your loan."

Here, the two share their must-follow tips for first-time homebuyers:

Don't let your credit card balance go above 30 percent utilization.

This means you only use up to 30 percent of the available credit on your card. "For your FICO score, the credit bureaus view 30 percent as the magic number," Haley explains. "It could affect your qualifying for a loan, and it is a big factor in your FICO score so it could fluctuate your credit score which in turn affects the calculation of your interest rate, private mortgage insurance, and total monthly mortgage payment."

Don't put any large purchases on your credit card.

"Sometimes it's fine, but sometimes it's not," says Haley. "If it's within the last 30 days, even if it is acceptable, we have to go through sources of documentation, and that can delay things and impact your closing rate."

Don't keep large balances on your card.

"It brings down your credit score, and ties into your utilization and FICO rate again," Rachel says. "Also when you carry higher debts your minimum monthly payments on the card could be higher which will affect your qualification. But the bigger issue is what it does to the scores."

Don't make any purchases that would result in debt without consulting with a loan officer.

"I have a lot of customers who want to buy things for their new house that could involve financing—things like furniture, appliances." Which is understandable, but again, financing large purchases changes your debt to income ratio and loan eligibility. When is it safe to make that big purchase? "When you have the keys to your new house in your hand," Rachel says. Her advice? Spend normally, pay it off regularly, and try to avoid the large purchases. "You want your spending track record to stay consistent," she says.

Don't co-sign any loans for a family member.

This usually comes in the form of innocently wanting to help an adult child buy a car or a house, but, as Haley explains, "Most people don't realize it shows up on their credit report. If you guarantee or co-sign, you are essentially responsible for the entire loan," she says. And that, of course, impacts your debt-to-income ratio.

Don't deposit any cash that cannot be sourced, and don't pay off credit with funds that can't be sourced.

If you are making large deposits or paying off something like a car or credit card, you must show that these are your own funds or acceptable funds—not cash," Rachel says. Acceptable funds for debt, credit pay off or a down payment have to be sourced with a paper trail—something like a check—in order to stay compliant with the Patriot Act (to avoid money laundering) and ensure the money isn't a cash loan that would impact your ratio.

Don't open any new accounts.

This one is tricky. Opening anything new that has a line of credit will change your circumstances and impact your DTI ratio. This includes things like a Kohl's card to unlock a discount, or an airline miles card. Even when you make an online purchase and are offered to choose to make "four equal payments with no interest," that's a form of financing—and all of these will show up on credit reports. "You are financing something, and if you miss a payment it affects you just like any other loan," Rachel says. "So now is not the time to open those."

Being a first-time homebuyer is filled with plenty of firsts and new information, so it makes sense to have an experienced loan officer on your team. Visit LennarMortgage.com to find out about loan options that might be a fit for you, and connect with one of our loan officers. 

   

Search Results for query

May 13 2021

4 Questions You Must Ask Before Buying a Home

We've put together some questions to ask yourself when the time is right for you to buy a home.

Read More

May 06 2021

4 Mistakes Buyers Make in a Seller's Market

Buying your dream home in a seller's market is possible if you're able to avoid these common mistakes.

Read More

April 28 2021

Understanding Closing Costs

An important part of calculating your budget when home shopping includes considering closing costs, which are additional payments you will need to either pay upfront or roll into your loan and gradually pay off

Read More

April 21 2021

The Just-Right House

Home sizes in the U.S. have been growing steadily over the years, and with our sudden shift to stay-at-home living, new home buyers are thinking hard about what that means for them as they plan their dream homes. Here are a few factors to consider.

Read More

April 15 2021

How to Get a Mortgage When You're Self-Employed

Here are a few things you need to consider to land the best possible mortgage when you're self-employed.

Read More

April 07 2021

3 Surprising Refinancing Mistakes

When refinancing, be careful to avoid some pitfalls and traps that could cost you money in the long run. Here are some of the most common mistakes people make when they rush to refinance.

Read More

March 31 2021

10 Unexpected Spring-Cleaning Tips

Keep your home in the best possible shape with these surprising life hacks.

Read More

March 23 2021

Tax Season Tips for Homeowners

If you're a new homeowner, you might be wondering how homeownership affects your taxes. The answer is: It depends on one big thing—will you be itemizing your deductions or claiming the standard deduction?

Read More

March 11 2021

A Virtual Homebuying Helper: Lennar Homebuying Seminars

Online webinars are making it easier than ever to help buyers get educated and take the first steps toward their dream of homeownership.

Read More

First23456Last

Mortgage Calculators

Crunch the Numbers With Our Helpful Mortgage Calculators

Payment Calculator

payment calculator

Payment
Calculator

Affordability Calculator

affordability calculator

Affordability
Calculator

Refinance Calculator

refinance calculator

Refinance
Calculator

The Modern Digital Mortgage with a Personal Touch

Paperless. Effortless. Awesomeness TM

Simplify the home financing process with our Digital Mortgage. We'll be here to help navigate you through the entire process.

Get Pre-qualifiedWhat is a Digital Mortgage?