10 Things You Shouldn't Do When You're Buying a Home
by Alex Rad
Home Buying
Don'ts
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 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 are depending on a mortgage to move in, you'd best
wait until after closing to buy the car.
An increase in your debt to
income ratio reduces the amount of monthly income available for your mortgage
payment.
If you tack on a higher car payment, the bank might decide
you cannot afford the home.
Using cash to purchase the car could also
create a problem, since banks consider cash reserves when approving your
mortgage. If you must make a major purchase before closing, talk to your loan
officer before you do it.
2. Don't Change Jobs Unless It's
Necessary
Home 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 for sale by owner sellers don't understand that funds are to be applied to
your expenses at closing.
I've heard many stories about sellers who
spent the deposit money prior to closing. When the transactions didn't take
place for valid reasons--such as financing or repair issues, the buyers had to
fight for a refund.
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 the 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 the 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. Decide what type of repairs you can realistically
tackle, then stick with the decision.
5. Don't Forget to Switch
Utilities
That sounds simple, but you'd be surprised how many
people forget to apply for utility service at their new home. Call the utility
companies as soon as you have a contract. Find out how many days 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.
6. Line Up Your Hazard Insurance
A no-brainer,
right? But it's another often-forgotten 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 that closing isn't delayed. In some locations, additional types of
insurance coverage might be necessary. Talk to your lender about insurance
requirements well before the closing date.
7. Don't Become Best
Friends with the Seller
I'll get some flack on this one. It's
great to be friendly, but don't get into too many long discussions with the
sellers, because personality conflicts often cloud judgments.
Remember, this is their home. You're no doubt excited about moving in, and if
you didn't like the house you wouldn't have offered to buy it. But you'll make
changes--everyone does. A casual statement about "ripping up that ugly carpet"
might be hurtful enough to keep the seller from negotiating with you about
repairs or other issues that crop up.
8. Don't Panic if the
Appraisal Comes in Low
At least not at first. There are some
things you (and your agent) can do to correct the problem. Study your
options.
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.
10. Don't
Ignore Home Lender Requirements
Know what is expected of you and
take care of it. For instance, a Certificate of Eligibility is required to move
forward on a VA loan. That's something you must handle yourself. Answer lender
questions and provide required paperwork as quickly as possible--your closing
depends on it.
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