Planning to buy a home? Before you head to the bank to withdraw all your savings, read these 10 commandments of buying a home, and if you don’t think you can follow through with most (or all) of it…. it may be best to reconsider your plan of action.

 

Or as Gandalf would say: YOU SHALL NOT PASS BUY!

#1 – Thou shalt not change jobs, become self-employed or quit thy job
Besides the initial amount for a down payment, you’ll need to pay a monthly installment for your housing loan, therefore you will need a job with a stable income to pay for it.

#2 – Thou shalt not buy a car, truck or van
…or thy shalt be doomed to live in it! A big-ticket item like a car will likewise require you to pay a monthly installment, so unless you’re earning enough to support upkeep for both house and car without having to eat grass, it may be best to keep that in your wish-list for the time being.

#3 – Thou shalt not use credit cards excessively or accrue more debt
Everybody knows that credit card debt is a very real thing, so the best advice I can offer is to limit your credit card spending, and avoid accumulating more debt that will affect your finances and chances of getting a housing loan.

#4 – Thou shalt not spend money set aside for closing
In addition to the initial down payment, you’ll also need to set aside some money for closing costs when buying a house, which include legal fees, stamp duty, house evaluation fees, utility deposits, etc. That will add up to a fairly significant amount when combined with your deposit.

#5 – Thou shalt not omit debts or liabilities from loan applications
When applying for a housing loan, don’t leave out important information like debts or liabilities, even if you think it will affect your chances of being approved. Omitting this information will only get you in trouble later on when they are found out.

#6 – Thou shalt not buy furniture and décor on credit
It’s tempting to swipe your credit card to get that picture-perfect IKEA kitchen or a complete set of Noritake diningware, but setting your standards a little lower and hunting around for cheaper alternatives like neighbourhood furniture shops can do wonders in lowering your expenses too.

#7 – Thou shalt not originate any inquiries into thy credit
While most of us are unlikely to be caught declaring paper assets as cash or buying 4 overpriced properties in Melbourne, you also don’t want your lender (a.k.a the bank) to have cause to inquire into your credit and potentially affect your loan approval. Remember, keep it clean!

#8 – Thou shalt not make large deposits without checking with thy loan officer
In fact, you shouldn’t make large deposits without first thinking it through, let alone checking with your loan officer – who of course is probably much more knowledgeable about these kind of things.

#9 – Thou shalt not change banking accounts
For the sake of consistency, reliability, and credit history. Need we say more?

#10 – Thou shalt not co-sign a loan for anyone
Again, this is a big no-no, especially if you know you already have plans to apply for a housing loan (or any other big loan). Some housing policies don’t allow you to take a loan if you already have one in place, while banks may impose higher rates and a stricter criteria on loan approvals.

(Source of inspiration: Lighter Side of Real Estate)