Buyer Don'ts
Your home buying process is well underway. The
sellers accepted your offer to purchase. The home is
officially under contract and you're counting down
the days to closing. The lender pre-approved you, so
buying the house is a sure thing, right?
Not quite. Nothing is certain until the keys are in
your hand and the deed is recorded. There are still
hurdles to get past before it's yours, and your
actions between now and closing can create
headaches, slowdowns and even stop the transaction.
1. Don't Make a Major Purchase
You've just found out your credit is A+. That's
great news, because a new car would look fantastic
in the driveway of your new home. But hang on--if
you are depending on a mortgage to move in, you'd
best wait until after closing to buy that car.
An increase in your debt to income ratio reduces the
amount of monthly income available for your mortgage
payment.
If you tack on a higher car payment, the bank might
decide you can't afford the home.
Using cash to purchase the car could also create a
problem, since banks consider cash reserves when
approving your mortgage. If you must make a major
purchase before closing, talk to your loan officer
before you do it.
2. Don't Change Jobs Unless It's Necessary
Lenders like to see a consistent job history.
They aren't usually as nervous if you change jobs
within the same field, but it's better to stay put
until the house is yours.
3. Don't Give an Earnest Money Deposit Directly
to a For Sale By Owner Seller
Your good faith deposit should go into a trust
account. Some for sale by owner sellers don't
understand that funds are not their to spend until
closing.
I've heard many stories about sellers who spent the
deposit money prior to closing. When the
transactions didn't take place for valid
reasons--such as financing or repair issues, the
buyers had to fight for a refund.
Find an attorney or other neutral party who will
hold the deposit for you until closing day and make
sure your contract dictates what happens to the
funds if the transaction doesn't close.
4. Don't Let Your Emotions Take Over
Keep a cool head during the entire home buying
process, especially during and after a home
inspection. Be realistic. No home is perfect,
especially older homes. It's not unusual for new
owners to take care of some repairs themselves.
Don't let the seller's refusal to do a small repair
kill the deal on a home you truly love.
On the other hand, don't fall so much in love with
the house that you'll buy it no matter what needs to
be done--unless you're sure you can handle it
emotionally and financially. Decide what type of
repairs you can realistically tackle, then stick
with the decision.
5. Don't Forget to Switch Utilities
That sounds simple, but you'd be surprised how
many people forget to apply for utility service at
their new home. Call the utility companies as soon
as you have a contract. Find out how many days lead
time they need to switch the service, then get back
with them when you have a firm closing date.
Don't forget to discontinue services at your old
home.
6. Don't Forget to Line Up Your Hazard Insurance
A no-brainer, right? But it's another
often-forgotten task that buyers scramble to take
care of at the last minute. Before closing, your
lender will want to see an insurance binder showing
you have coverage for the new home. Get it as early
as possible so that closing isn't delayed.
In some locations, additional types of insurance
coverage might be necessary. Talk to your lender
about insurance requirements well before the closing
date.
7. Don't Become Best Friends with the Seller
I'll get some flack on this one. It's great to
be friendly, but don't get into too many long
discussions with the sellers, because personality
conflicts often cloud judgments.
Remember, this is their home. You're no doubt
excited about moving in, and if you didn't like the
house you wouldn't have offered to buy it. But
you'll make changes--everyone does. A casual
statement about "ripping up that ugly carpet" might
be hurtful enough to keep the seller from
negotiating with you about repairs or other issues
that crop up.
8. Don't Panic if the Appraisal Comes in Low
At least not at first. There are some things you
(and your agent) can do to correct the problem.
Study your options.
9. Don't Go It Alone
If you're working with an agent, it's the
agent's duty to track many of the day to day details
that involve the lender, the seller, or the seller's
agent. Be sure your agent schedules a final
walkthrough just before closing.
10. Don't Ignore Lender Requirements
Know what is expected of you and take care of
it. For instance, a Certificate of Eligibility is
required to move forward on a VA loan. That's
something you must handle yourself. Answer lender
questions and provide required paperwork as quickly
as possible--moving into your new home depends on
it.
Buyer Don'ts
Your home buying process is well underway. The
sellers accepted your offer to purchase. The home is
officially under contract and you're counting down
the days to closing. The lender pre-approved you, so
buying the house is a sure thing, right?
Not quite. Nothing is certain until the keys are in
your hand and the deed is recorded. There are still
hurdles to get past before it's yours, and your
actions between now and closing can create
headaches, slowdowns and even stop the transaction.
1. Don't Make a Major Purchase
You've just found out your credit is A+. That's
great news, because a new car would look fantastic
in the driveway of your new home. But hang on--if
you are depending on a mortgage to move in, you'd
best wait until after closing to buy that car.
An increase in your debt to income ratio reduces the
amount of monthly income available for your mortgage
payment.
If you tack on a higher car payment, the bank might
decide you can't afford the home.
Using cash to purchase the car could also create a
problem, since banks consider cash reserves when
approving your mortgage. If you must make a major
purchase before closing, talk to your loan officer
before you do it.
2. Don't Change Jobs Unless It's Necessary
Lenders like to see a consistent job history.
They aren't usually as nervous if you change jobs
within the same field, but it's better to stay put
until the house is yours.
3. Don't Give an Earnest Money Deposit Directly
to a For Sale By Owner Seller
Your good faith deposit should go into a trust
account. Some for sale by owner sellers don't
understand that funds are not their to spend until
closing.
I've heard many stories about sellers who spent the
deposit money prior to closing. When the
transactions didn't take place for valid
reasons--such as financing or repair issues, the
buyers had to fight for a refund.
Find an attorney or other neutral party who will
hold the deposit for you until closing day and make
sure your contract dictates what happens to the
funds if the transaction doesn't close.
4. Don't Let Your Emotions Take Over
Keep a cool head during the entire home buying
process, especially during and after a home
inspection. Be realistic. No home is perfect,
especially older homes. It's not unusual for new
owners to take care of some repairs themselves.
Don't let the seller's refusal to do a small repair
kill the deal on a home you truly love.
On the other hand, don't fall so much in love with
the house that you'll buy it no matter what needs to
be done--unless you're sure you can handle it
emotionally and financially. Decide what type of
repairs you can realistically tackle, then stick
with the decision.
5. Don't Forget to Switch Utilities
That sounds simple, but you'd be surprised how
many people forget to apply for utility service at
their new home. Call the utility companies as soon
as you have a contract. Find out how many days lead
time they need to switch the service, then get back
with them when you have a firm closing date.
Don't forget to discontinue services at your old
home.
6. Don't Forget to Line Up Your Hazard Insurance
A no-brainer, right? But it's another
often-forgotten task that buyers scramble to take
care of at the last minute. Before closing, your
lender will want to see an insurance binder showing
you have coverage for the new home. Get it as early
as possible so that closing isn't delayed.
In some locations, additional types of insurance
coverage might be necessary. Talk to your lender
about insurance requirements well before the closing
date.
7. Don't Become Best Friends with the Seller
I'll get some flack on this one. It's great to
be friendly, but don't get into too many long
discussions with the sellers, because personality
conflicts often cloud judgments.
Remember, this is their home. You're no doubt
excited about moving in, and if you didn't like the
house you wouldn't have offered to buy it. But
you'll make changes--everyone does. A casual
statement about "ripping up that ugly carpet" might
be hurtful enough to keep the seller from
negotiating with you about repairs or other issues
that crop up.
8. Don't Panic if the Appraisal Comes in Low
At least not at first. There are some things you
(and your agent) can do to correct the problem.
Study your options.
9. Don't Go It Alone
If you're working with an agent, it's the
agent's duty to track many of the day to day details
that involve the lender, the seller, or the seller's
agent. Be sure your agent schedules a final
walkthrough just before closing.
10. Don't Ignore Lender Requirements
Know what is expected of you and take care of
it. For instance, a Certificate of Eligibility is
required to move forward on a VA loan. That's
something you must handle yourself. Answer lender
questions and provide required paperwork as quickly
as possible--moving into your new home depends on
it.
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