Top 10 Things You Should NEVER Do When Buying a House
Buying a house is a thrilling yet complex process. To ensure your journey to homeownership goes smoothly, it’s essential to steer clear of common mistakes. In this article, we’ll reveal the top 10 things you must avoid when purchasing a house. From financial missteps to overlooking crucial details, let’s explore key advice for prospective homebuyers.
- Avoid changing jobs or becoming self-employed during the loan process. Lenders seek job stability and consistent income. Changing jobs or quitting mid-process can raise concerns. Lenders typically require 2 years of tax returns, so this applies to self-employment as well. For instance, a client who changed jobs right before closing faced issues when their new employer couldn’t provide pay stubs promptly, resulting in failure to close on their home.
- Avoid buying or leasing a new car before closing on your home. Lenders assess your credit, assets, and debt-to-income ratio when approving loans. Purchasing or leasing a vehicle can impact all three factors. Banks consider lease payments as additional debt, and leasing often requires a significant down payment. It’s crucial to keep your funds and credit available until after closing on your home.
- Avoid increasing your credit card debt or applying for new credit cards before closing on your home. Maintaining or improving your debt-to-income ratio is crucial as you approach closing day. Additional debt on your cards can raise concerns for mortgage lenders. New credit inquiries can complicate the mortgage approval process and raise red flags. Lenders typically recheck your credit score just before closing, and any changes may impact the approval. To minimize risk to the lender, it’s advisable to wait until after closing to apply for new credit.
- Don’t overlook lending requirements. When obtaining a home loan, you need to satisfy both the appraiser and the underwriter. The underwriter may request various documents to grant a “clear to close” for your loan. Make every effort to provide the necessary documents promptly to ensure your loan closes on schedule.
- Remember to switch your utilities. While it may seem insignificant compared to other tasks like inspections and lending requirements, ensuring your utilities are transferred is essential. It’s easy to overlook amidst the various responsibilities involved in the home buying process, but it’s crucial for a smooth transition into your new home.
- Avoid purchasing large items on credit before closing. Even if you’re fully approved and close to finalizing the deal, refrain from making big-ticket purchases like furniture. The underwriter will review your credit just before closing, so it’s wise to wait until after closing to avoid complications.
- Don’t panic if the appraisal for your new home comes in low. Every once in a while, we see a situation when the appraisal comes in lower than the sales price. While this could be problematic, it’s not the end of the world and there can be resolutions.
- Stay level-headed throughout the home-buying process. While it’s natural to feel excited, emotions can escalate during negotiations, especially regarding repairs post-inspection. Avoid asking for every minor repair, but also don’t hesitate to address significant issues. Remember, negotiation is key, and things usually work out in the end.
- Avoid falling behind on bills. Timely bill payment demonstrates responsibility, which is crucial for securing your mortgage loan.
- Don’t be alone. We, your Realtor can alleviate much of the stress by managing inspections, negotiating repairs, and liaising with your lender and the title company. We’re here to lighten your load and ensure a smooth process.
In conclusion, navigating the journey of purchasing a house requires careful consideration and avoidance of common pitfalls. By steering clear of the top 10 mistakes outlined in this article, you can pave the way for a successful and fulfilling homeownership experience. Remember, with the right knowledge and preparation, your dream home is within reach. Happy house hunting!