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 even pre-approved you, so buying the house is a sure thing, right?
Not quite. Nothing is certain until the keys are in your hands. There are still major hurdles to get past before you close, 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’re depending on a mortgage to move in, you’d better 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, so 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 create a problem, too. Banks consider your cash reserves (cash you have on-hand) when approving your mortgage. If you must make a major purchase before closing, get the green light from your loan officer first.
2. Don’t Change Jobs Unless It’s Absolutely 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 keys to the house are in your hand.
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 FSBO sellers don’t understand that funds are to be applied to your expenses at closing. There are many horror stories about sellers who spent earnest money deposits prior to closing, then couldn’t refund buyers when the transactions fell through.
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 an 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 a 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 a house that you’ll buy it no matter what needs to be done, unless you’re absolutely sure you can handle it emotionally and financially. Know in advance what types of repairs you can realistically tackle, then stick with your decision. Don’t get in over your head because you let emotions sweep you away.
5. Don’t Forget to Switch Utilities
It sounds simple, but you’d be surprised how many people forget to apply for utility services when they move. Call the utility companies as soon as you have a contract, find out how much 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, too.
6. Don’t Wait to Line Up Your Hazard Insurance
A no-brainer, right? But it’s another forgettable 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 closing isn’t delayed.
In some locations, additional types of insurance—such as fire or flood coverage—might be mandatory. Talk to your lender about insurance requirements well ahead of closing.
If you’re not sure where to start, a seasoned real estate pro with a strong network like Julie’s can refer you to a knowledgeable insurance professional.
7. Don’t Become Best Friends with the Seller
You’re undoubtedly excited about moving in. If you didn’t like the house you wouldn’t have offered to buy it, but you’ll make changes…everyone does. But chat with the seller once too often and you might let slip a casual statement about tearing out ugly carpet or gutting a hideous bathroom—statements that may be hurtful enough to keep the seller from negotiating with you on necessary repairs, or resolving other problems that can (and do) crop up during escrow.
It’s great to be friendly, but personality conflicts often cloud judgments. Remember: until you have the keys, this is someone else’s home. Keep your relationship with the seller professional and detached, and send communications through your agent whenever possible.
8. Don’t Panic If an Appraisal Comes in Low
At least not at first. There are some things you and your agent can do to correct any problems an appraiser calls out. An experienced agent like Julie can advise you on your options and help you decide the best course of action in any uncomfortable situation.
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. There are many nuanced real estate laws to navigate, too. Hire a trained agent like Julie to ensure a smooth transaction from start to finish.
10. Don’t Ignore Any Requirements
Know what’s expected of you and do it all on time! There are many cogs turning in your real estate transaction, and timing is a huge factor in how well the whole machine works. Responding to deadlines by completing paperwork and answering questions in time is non-negotiable. Letting even one deadline fall by the wayside could terminate your entire transaction, pushing you all the way back to square one.
If you need help, or just have a few questions, give me a call. I’m always here to help you navigate your real estate journey.