Steer clear of key pitfalls when purchasing a new home. Prioritize consistency, discipline, and safety throughout the process.
Things to Avoid When Buying a New Home
After securing approval from your lender and having your offer accepted, the excitement to start shopping for your new home can be overwhelming. However, exercising discipline and being vigilant throughout the remaining steps is crucial before you can finally get your keys. Here are essential guidelines to keep in mind during the home buying process, ensuring a seamless journey.
Exercise Caution with Major Expenses: Delay significant purchases like appliances, electronics, and furniture until after your loan closes. This includes big vacations and vehicle purchases. Even buying with cash can affect your loan approval, as lenders consider your available cash.
Maintain Job Stability: Keep a consistent work history to bolster your application. While changing careers before applying for a mortgage may not impact your approval, switching jobs during the loan process could affect your status.
Ensure Banking Stability: Avoid relocating funds or changing banks. Your lending institution will need recent bank statements for your various accounts. They require a clear paper trail to verify the source of your funds and to prevent fraud. Changing banks or moving funds around might make it harder for them to verify your history.
Exercise Caution with Direct Deposits in FSBO Deals: Remember, your earnest money is not the seller’s – it’s yours until the deal is sealed. To ensure it goes towards your closing costs, consider using an attorney or a neutral party to hold the funds in a trust account. Make sure the purchase agreement with the seller outlines the earnest money’s fate in case the deal falls through.
Avoid Overextending Finances: Ensure you can comfortably afford your monthly mortgage payments without sacrificing other essential expenses.
Maintain a Healthy Credit Score: Avoid late payments or opening new lines of credit before applying for a mortgage. A higher credit score can lead to better mortgage terms.
Prioritize Pre-Approval: Get pre-approved for a mortgage. This process gives you a clear understanding of what you can afford and makes you a more attractive buyer.
Factor in Hidden Costs: Consider closing costs, property taxes, and potential maintenance expenses. Don’t forget to factor these into your budget!
Explore Different Loan Options: Research and understand the various mortgage options available to you. Don’t assume a fixed-rate mortgage is the only option.
Never Skip Home Inspections: Always conduct a thorough home inspection. It can reveal hidden issues that may cost you a lot of money down the line.
Loan Process
- Preparation and Documentation
- Pre-Approval
- Home Search
- Loan Application
- Appraisal
- Underwriting
- Conditional Approval
- Final Approval
- Closing
- Funding and Disbursement
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