Everyone knows that buying a home can be incredibly stressful—albeit, very rewarding. The home buying process involves a lot of attention to detail, financial planning, and a willingness to cooperate with each of your potential lenders.
On average, it takes about 47 days to successfully close on a house. Though this number can vary quite a bit, depending on your personal financial situation, the seller’s situation, the housing market, and other factors, you should expect to be engaged in the home buying process for at least a month.
During this time, it will be critical that you carefully manage your finances and focus on the end goal (having a place you can call your own). About ten percent of “done deals” fall through towards the end, which can be incredibly frustrating and disappointing for all parties involved.
There are plenty of lists of things you should do when preparing to close on the house of your dreams. But what about the things you shouldn’t do, no matter how tempting they might be?
Let’s take a closer look at the eight things to avoid before buying a home:
Avoid These Key Things...
1. Don’t Make Any Assumptions
There are a lot of general “rules of thumb” people use to navigate the home buying process and, in general, these rules of thumb can often be very useful. However, they can also sometimes be very misleading. For example, many people assume that in order to buy a home, you must be able to put 20 percent down—though this used to be the case, times are changing. Today, people regularly finance home purchases with five percent down or even less if they’re able to qualify for a loan backed by the VA or FHA.
2. Don’t Ignore Your Lenders
One of the surest ways to cause a housing deal to collapse is to not communicate with your lenders. During the homebuying process, they are going to ask for a lot of paperwork, which can include bank statements, proof of income, tax returns, and other important pieces of financial information. If your lender asks for something, even if it might feel a little intrusive, it is important to send it over as soon as you possibly can.
3. Don’t Make Any Major Purchases
Many people might think to themselves, “I’m about to buy a home, that means it’s also time to buy some furniture and even a new car.” While it’s natural to want these things, making a huge purchase—one that either increases your debt or decreases the amount you can use for the down payment—might cause the entire deal to fall through. Though potentially inconvenient, it’s best to save these large purchases for later.
4. Don’t Make Any Major Career Changes
When your lender approved you for a home loan, they did so assuming that—more or less—you’d continue working the same job and continue making the same income. They will want to see that you are regularly getting paid and don’t just have some money in the bank. Quitting your job before closing a home can cause the deal to fall through.
Wait, avoid these things as well...
5. Don’t Increase Debt to Cover the Down Payment
Making a larger down payment will decrease your monthly payment, which is desirable for a lot of people. However, if the only way you can make this down payment is by maxing out a credit card or taking out a personal loan, you’ll only be asking for trouble. Any action that changes your debt-to-income ratio should be avoided.
6. Don’t Be Afraid to Shop Around
In the excitement of the home buying process, it can be very tempting to settle on the first house you look at or go with the first lender you hear from (especially if the lender was recommended by your realtor). However, it’s important to remember that your home is one of the largest purchases that you will ever make—don’t be afraid to shop around and explore your options.
7. Don’t Mislead Your Lenders
Everybody wants to “look good” for their lenders, which is why you might be tempted to misrepresent your financial situation. Overstating your income or assets might temporarily move the mortgage-closing process along, but these sorts of misleading statements will eventually catch up with you. It’s better to be honest and “appear” a little bit poorer to lenders than to lie and set yourself up for future problems.
8. Don’t Give Up
A home is a huge purchase—naturally, the home buying process will be both exciting and nerve-wracking. With all the stress you are experiencing, you might be tempted to just give up and call it quits. However, you should know that there is a light at the end of the tunnel. As long as you continue cooperating with your lender and following the steps to close on a home, you will eventually get there.
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