There are tons of articles out there that give information on what a home buyer should be doing to set themselves up for success. But what we rarely see are articles on what a home buyer absolutely should avoid doing to be able to buy their dream home. Having helped many people find their next home, I can say from experience that some of the tips outlined below can be deal-breakers – as in, I’ve had buyers lose the home because they couldn’t follow a couple of 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 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 me explain…Your mortgage pre-approval is based on your income and your debts. A mortgage lender looks closely 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
I 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 a 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 the point that you no longer qualify for a loan (or at least at the amount you need). This is because mortgage lenders pay attention to how much savings you’ll have after the home purchase transaction finishes, and those savings are called reserves. Each lender and loan type has 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, I 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!
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 prompt to get those answers.
Skip the Home Inspections
There seem to be three reasons that home buyers decide to skip home inspections.
They are in the construction industry and believe they can do it themselves.
They are tight on money and think it’ll be ok.
The market is so crazy hot and competitive that they think it’s the only way to win the home.
Regardless of why 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 plumbing, electrical, roof, and HVAC systems.
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 owning the home. Sometimes though, during the inspections, you may find some significant causes of concern about whether you actually want to purchase the house (like finding out it needs a $50,000 foundation fix – eek!). And believe me, I’d rather you be able to walk away from a money pit and lose a bit of money now instead of a ton later.
Most people don’t consider that inspection reports are actually leverage. Without the inspector’s report, 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, I’ve often seen my clients become panicked or angered when they find out something is “wrong” with the house.
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 initially, it was clean and shiny and looked like a perfect 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 relatively level, etc. Every house has something that needs to be fixed, 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, 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. I personally like to think of those things as the home’s personality quirks. Like your dog’s snoring, it 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) before 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?
I hope this article will help you on your journey to homeownership! If I’ve learned anything over the years, it’s how to help my clients avoid accidentally missing their opportunity to own the home that’s right for them. Have questions about the path to homeownership? Give me a call today – I’d love to help.