Avoid these financial mistakes when buying a home

Buying a home, especially for the first time, can feel like a daunting task. There are many things you need to do before you can confidently make an offer on a home, especially in a fast-paced environment like the Silicon Valley. Once your offer has been accepted you'll likely be excitedly counting down the days until you can move in and start your life as a homeowner. So even if you've been pre-approved for a home loan avoid these financial mistakes during the home buying process. Here are the top 5 financial mistakes you'll want to keep in mind.

1. Don’t quit your job or change careers
Seems obvious, but you'd be surprised how many people make this mistake. The problem often occurs after a home buyer has already had their offer accepted. There's a false sense of security that things are locked-in once a ratified agreement has been established. However, the problem isn't with the seller's side it's with the lender. Mortgage lenders real work begins once you get into contract, meaning, they're still vetting you and your ability to repay the loan they pre-approved you for. A lender wants to ensure you have stable income and employment and that you can afford to repay your mortgage. Any changes to your employment status can cause major delays to escrow or, worse, cause you to back out altogether.

2. ​Don't open new credit cards/lines of credit or max out your current credit limits
This is the one that trips people up the most. It seems like having more available credit would be a good thing, but any changes to your overall financial situation can be red flags for the lender. Applying for a new credit card  or even requesting an increase on an existing card will result in a "hard" inquiry on your credit, which can wind up lowering your credit score, which is a function of your home loan approval and interest rate.

3. ​Don't apply for other loans (education, cars, solar, furniture, home equity lines of credit, etc.)
One of the most exciting parts of becoming a homeowner is furnishing and decorating your new abode, but please wait to make any purchases or apply for store credit! For the same reason as above - this can have a negative impact on your credit score. Furthermore, a new loan for a car, an expensive couch, or even major home appliances will change your "debt-to-income ratio" or DTI which is an important qualifier for the lender. ​This includes co-signing for someone else's loan(s), even if they are the primary lendee, once your name is attached you become financially liable and the debt you're agreeing to back becomes part of your DTI.

4. Don't consolidate debt
It may seem like a positive thing to consolidate debt and it's true that over time debt consolidation can help making it easier to make payments on time which will improve your credit score and reduce your overall debt, however, debt consolidation can have a detrimental impact on your credit score. This is because taking out a new loan and closing multiple accounts in a short period of time appears risky to credit reporting bureaus as well as a mortgage lender's underwriter, the person responsible for thoroughly analyzing your finances.

5. Don't move money around 
​In mortgage underwriting, large movements of money can be a red flag. Avoid making large deposits or withdrawals from your bank accounts or other assets. If lenders suddenly see unsourced money coming in or going out, it might look like you got a loan, which would impact your debt-to-income ratio.