4 Unexpected Things That Can Prevent You From Buying a Home in Houston

Is there anything more exciting than looking for a new home? Seeing the look on my clients’ faces when they discover the house of their dreams in Houston is the absolute best part of my job! Unfortunately, there are a few unexpected things that can prevent you from buying your dream home in Houston, even if you have lots of money.

As an experienced, licensed Realtor® in the city of Houston, I help homebuyers solve the challenges keeping them from their dreams. It’s not always a quick or easy process, but the first step is always identifying the unexpected reasons that could prevent you from buying a house. Most of the time, these issues involve being disqualified for a home loan. Without a loan, a home purchase is unfortunately out of reach to most of us. Before you start looking for a house to buy, be aware of these potential complications!

Here are 5 unexpected things that can prevent you from buying a home in Houston!

1. Job Loss

Losing your job makes everything more difficult! In addition to putting you in a tough economic position, it makes securing a home loan much more challenging. To a mortgage lender, your employment status is a big part of the lending equation. If you were employed at the time you applied for a loan and then lose your job, you need to report it to your lender immediately. 

Your main challenge will be convincing the lender that you still have the ability to make regular loan payments on time every month. Your lender may consider alternative income sources such as social security benefits, disability income, public assistance, or pension funds. You may also be able to use income from your partner or a family member by making them a co-signer on the loan.

Related: Insider Tips to Buying A House From A Realtor®

2. Starting a New Job or Becoming a Freelancer

To a lender, there’s a big difference between changing jobs before buying a house and changing jobs while buying a house. Changing jobs after you’ve applied for a mortgage but before the loan closes could severely complicate your application. 

The reason why is because when you change jobs after applying for a loan, underwriters have to start their work all over again, basing your application off your new job. Plus, if you’re changing professions, you’d have a shakier employment history from the lender’s point of view. For a standard mortgage application, underwriters need to see a two-year work history. You could potentially still get approved based on your new job, but only after some delays.

3. Large Credit Purchases

Most people think that once they pass a credit check or receive a commitment letter or pre-approval from a lender, they are guaranteed a mortgage loan. Unfortunately, that isn’t true!  You can be denied at any time. For this reason, any credit splurges during the mortgage process are to be avoided! There are two reasons why you want to wait until after you’ve made your first mortgage payment to make any big purchases: your credit score and your debt-to-income ratio. 

Most lenders base their loan terms on your credit score. Opening a new credit account or obtaining a new loan for a vehicle or other big-ticket purchase can drop your credit score and make your lender back out. Similarly, your debt-to-income (DTI) ratio will generally be the deciding factor on how large of a loan you can qualify for. Adding a $200 payment each month to your DTI can make you ineligible for the loan your lender agreed to!

4. Late Credit Card Payments

When applying for a mortgage, lenders can view late credit card payments as a sign of financial struggle. How seriously this impacts your application depends on things like how many late payments you have and whether you have any other credit issues on your file. Fortunately, lenders do recognize the difference between forgetting to pay on time and being unable to pay on time.

If you have late payments on record, your lender will want to know the reason for your late payment, how long ago it happened, and how much money was involved. They’ll also look at what you’ve been doing since to improve your financial situation. If they don’t like what they see, you could be out of luck and need to find a different lender.

Related: All Your Burning Questions About Home Buying – Answered!

If you make any of these unexpected mistakes during your home-buying process, it can derail the entire process. That’s why all homebuyers should work with an experienced Realtor® like me to help steer them away from all the pitfalls! I make sure my clients are well educated on what to do and what not to do to secure the home of their dreams. 

If you have questions about successfully buying a home in Houston, I can help! Contact Angel Fultz Realty today for a free consultation on your options.