There are tons of articles out there that give information on what a home buyer should be doing in order to set themselves up for success. But what we rarely see are articles on what a home buyer absolutely should avoid doing in order to be able to buy their dream home.
Having helped many people find their next home, we can say from experience that some of the tips outlined below can be deal breakers - as in, we’ve actually had buyers lose the home because they couldn’t follow a couple basic guidelines. Some of the other tips just plain make it easier for you to get through the process.
Open New Lines of Credit
It is so tempting to go get that new refrigerator (or washer/dryer or furniture) for your new
home and open up one of those big box store credit cards to take advantage of the extra discount they offer. However, this could be the downfall of your home purchase, and wouldn’t it be terrible to have that fridge with no home to put it in?
So please, do not open a new line of credit when you are trying to purchase a home. This is especially important between the time you get an offer accepted and closing on your new home. But really, this is important from the moment you get pre-approved for your mortgage.
Let us explain...Your mortgage pre-approval is based on your income and your debts. A
mortgage lender does an in-depth look at what money you reliably make on a monthly and
yearly basis, and then they compare this to what you owe.
Every lender and loan type has different guidelines as to what is an acceptable debt to income ratio, and if you change your ratios during the purchase process you may actually no longer qualify. Yikes! At a minimum, consult with your real estate agent and mortgage lender before opening a new line of credit to make sure it won’t mess anything up.
Buy a New Car
We don’t know what it is about a new home that makes people want to run out and get a new (or new to them) vehicle. Maybe it’s the new neighborhood? Or new garage? Whatever the reason, now is not the time. The reasoning is about the same as above with one additional component.
Yes, taking out a new auto loan can mess with your debt-to-income ratio. But also, auto purchases usually require a down payment and if this is pulled from your savings you could accidentally lower your reserves to a point that you no longer qualify for a loan (or at least at the amount you were needing).
This is because mortgage lenders pay attention to how much savings you’ll have after the home purchase transaction finishes. Those savings are called reserves. Each lender and loan type have different guidelines regarding reserves, so make sure you understand what they are in order to stay compliant.
Procrastinate On Turning in Paperwork
As a real estate agent, we understand this is such a stressful time! However, it doesn’t mean we can let things like signing important documents and turning in paperwork move to the
backburner. In fact, buying a house means you need to up your paperwork game!
Once a seller has agreed to your offer you are in a binding contract. And part of that contract are timeframes that you are obligated to follow. The consequences of not following the time frames could be as dire as losing out on the home of your dreams. No one wants that for you! Check out this list of documents you will likely need for during your mortgage loan process.
So please, when your real estate agent or mortgage lender asks you to sign a disclosure or turn in some financial documents, please make it a priority to do so. Of course, you can ask questions to make sure you understand what you are signing and why, but let’s be prompted to get those answers.
Skip the Home Inspections
There seems to be three reasons that home buyers decide to skip home inspections.
1. They are in the construction industry and believe they can do it themselves.
2. They are tight on money and think it’ll be ok.
3. The market is so crazy hot and competitive they believe it’s the only way to win the home.
Regardless of the reason you are considering skipping the home inspections, please don’t! A home could be absolutely gorgeous and recently remodeled, but still have issues with its major systems like plumbing, electrical, roof, and HVAC. Most of the time, the home inspection will inform you of what should be on your to-do list to keep the home comfortable and performing at its best.
That often includes a few larger items that you may want addressed before you own the home. Sometimes though, the inspections give you major cause for concern about whether you actually want to purchase the home (like finding out it needs a $50,000 foundation fix - eek!). And believe us, we’d rather you be able to walk away from a money pit and lose a bit of money now instead of a ton later. Here is a deep dive from National Association of Realtors on the importance of home inspections and some additional tips to consider during the inspection process.
Something most people don’t consider is that the inspection reports are actually leverage. As in, without the report from the inspector it becomes difficult (if not impossible) to negotiate with the seller for repairs to be done.
Panic When the Home Isn’t Perfect
We all know there is no such thing as perfect. And yet, when it comes to buying a home we've often seen our clients become panicked or angered when they find out something is “wrong” with the home. I’ll comment on brand new homes in a moment, but to begin let’s assume you are purchasing a house that has been lived in by someone else (we call this a resale home).
When you viewed the home originally it was clean and shiny and looked like a perfectly good home to you. But then you did the home inspection (thank you!) and found out that some parts of the home aren’t up to today’s building codes and that there is a leaky faucet or the floor isn’t quite level, etc. etc. Every. Single. House. Has something that needs to be fixed or is quirky or isn’t up to today’s codes.
That’s just the way it is. Building codes change all the time and homeowners aren’t expected to change things every time a code changes. Homeowners generally aren’t DIY wizards either and often overlook something that a home inspector may deem “wrong” because they don’t even know it’s incorrect.
Almost everything can be fixed. Some things are more expensive or unsafe than others, of
course, and that’s when you may want to negotiate for it to be repaired. For the things that may be harder to fix, but aren’t necessarily unsafe (like the slightly unlevel floor) you just have to decide if it’s something you can live with.
We personally like to think of those things as the home’s personality quirks. Just like your dog’s snoring, it sort of annoys you, but you also love it! A quick note on New Build Homes: You will have an opportunity to do a walk through with the foreman. Make sure to really look at everything in depth.
Most new home builders are very good at addressing any fixes (cosmetic or otherwise) prior to closing the sale. Most new home companies also offer extended warranties on workmanship and parts, so don’t be afraid to reach out to them down the road when something stops working the way it should.
Ready to Own a Home?
We hope this article will help you on your journey to home ownership! If we've learned anything over the years, it’s how to help our clients avoid accidentally missing their opportunity to own the home that’s right for them. Have questions about the path to home ownership? Give us a call today - we’d love to help!
Roger Lee & Donavan McFadden of the Marching 2 More Real Estate team extend our gratitude to our clients for entrusting us with their real estate endeavors. Your satisfaction and success are at the heart of everything we do.
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