Pitfalls to avoid when trying to buy a house

Ok so I have helped hundreds of people but and refinance homes, and there are things that may make no sense to you, but will totally jack up your home loan plans.

Don't buy a new car!!!!  I realize sometimes it is unavoidable.  But typically a person's car payment is the second highest monthly expense besides housing.  I have seen in some cases car payments higher than their mortgage.  This affects back end DTI (your total debt to income ratio when all expenses are taken into account.). Try to be smart about it if you must buy a car and don't go buying a Benz or Tesla.  If you can put off the purchase until after the home purchase, do it.

Car leases are tricky.  So let's say that you are close to the end of the lease and that expense may go away.  The assumption is that you will still need a car, so you will still be hit for that expense.  Most likely you will just trade that lease for another.

Don't start a new business.  For self employed people, 2 years tax returns to document income is standard.  Most small businesses fail in the first 5 years, and typically self employed people write off everything under the sun, so most likely your income will be much lower than you actually think it is.

Don't switch careers.  Generally an underwriter will look at the whole picture.  Even if you make more money, it's a new field.  That makes it look more unsteady and uncertain.  Most mortgages are for 30 years, so they will underwrite risk for the long haul.

Side jobs are hard to count as income.  Again, need two years to count, ideally the same actual job for two years.

Child support is hard to use to qualify with as income.  It has to be documented for at least a year, the same amount, the same time.  If there are irregularities, most likely that cannot be used.

A lot of business expenses cannot be "added back in."  Mileage, meals,  entertainment are a few examples.  Typically you can add back depreciation written off.

If you cosigned for someone, it's difficult to prove that and to have that debt excluded.  Let's say you consigned for your sister for a car loan.  You need to show both of you on the loan.  You need to get 12 months of bank statements for your sister to prove she pays herself, out of her separate bank account that you are not on.  If it was less than a year ago that the car was bought, you probably cannot exclude that debt.

There's a ton more to consider but hopefully this helps troubleshoot some common issues.

Oh and don't try to pay cash for the mortgage closing costs and down payment.  Even if you don't trust banks, suck it up and use them for now so we can track your money and know where it came from.  It's the Patriot Act.  We have to guard against money laundering.