Three Mistakes Buyers Make
Hello again! I hope your week has treated you well. Mine was busy and fulfilling which is just how I like it. My next two articles were inspired by the education session I mentioned in last week’s column. Today I’m going to talk about three things NOT to do while buying a home.
You’ve gone under contract for you new house! That’s so awesome and exciting isn’t it? As easy as it is to assume the hard part is done, the work has actually just started and there are some things you need to be careful not to do in the closing process. If you’re offered a promotion or raise at work DON’T TAKE IT! You’d think that would be a good thing, right? Well, it is and you should be very proud of yourself but delay the effective date until after closing. The loan process is a finicky business and any change in income circumstance, even for the better, can skew the process causing delays or even making you ineligible for the loan program you’re in. So thank your boss for her wisdom in recognizing how awesome you are, but respectfully request it wait until after you’ve left the closing table.
Win big on that scratch off? Sweet! Don’t cash it. Any large deposits into your accounts are a big red flag to the underwriters of your loan. If there are any unusual deposits they’re going to need a letter of explanation and lots of documentation. If you are borrowing funds for the down payment or closing costs from a family member your lender needs to know that up front so it can be appropriately explained and accounted for. So keep that ticket in a safe place and cash it on the way to your house warming party, or you may not have one to warm.
If you can save 15% off your purchase by applying for the retailer’s credit card politely decline. The worst thing you can do during the loan process is apply for credit! It will affect your credit score and debt to net ratios and I have seen many deals fall through because of it! I realize you’ll need furniture for the new house but wait if you can’t pay cash for it. Do not buy a car, do not save that 15%, and do not change your credit card activity. This is probably the most common mistake so take note.
These are three of many common mistakes and misunderstandings, so be sure to talk with your lender and Realtor about anything that may have the slightest possibility of effecting the closing process. It seems trite but it’s better to ask first than regret later. Next week I’ll talk address the sellers but in the meantime carve those pumpkins and stuff those scarecrows, Halloween is just around the corner. And, as always, send me any questions or topics you’d like me to write about. I only have 6 more opportunities left.