After several years of diligently saving money, I’m nearly ready to purchase my first home. Because I’ve been thinking about buying a home for so long, I know exactly what I want my house to look like. I desire a place that has three bedrooms and three bathrooms. I also need a quiet space to set up my home office in. I want a massive, walk-in closet in my master bedroom. My master bathroom needs to have double vanities, a tiled, walk-in shower, and a Jacuzzi tub. On this blog, I hope you will discover how to set priorities during your new home search. Enjoy!
If you're taking the leap and purchasing your first home, the entire process can seem very arduous and confusing. Once you put an offer on a house, and it is accepted, you begin a process known as closing. Depending on the seller, the closing process could take several weeks or months. It comes to an end on the closing date, when the paperwork is signed and you are given the keys to your new home. Unfortunately, several things can happen during the closing process that can put your purchase in jeopardy. Here are a few common real estate closing mistakes you should avoid:
A Sudden Career Change
In addition to your credit score, lenders will look at several other factors before approving your home loan. Two of them are your debt-to-income ratio, and another is your work history. If you suddenly quit your job to explore a new path, the bank might withdraw your mortgage approval.
This is because in order to not only initially secure the loan, but also make future payments, the bank will require you to have a reliable job history and a low debt-to-income history. If you change careers or unfortunately lose your job and don't have another lined-up, your debt-to-income ratio will dramatically change, which will put your mortgage in jeopardy.
Instead, stick with your current job, or if you are starting a new career during the closing process, make sure to explain to the bank why the switch is positive because it offers you a larger salary or more stability.
Ignoring the Closing Costs
When you sit down and sign the mountains of paperwork and the title is transferred, the real estate closing costs are due. Depending on the type of mortgage you secured and the purchase agreement, you could wind up either paying all the closing costs, share the cost with the seller, or have the seller cover all of the costs.
According to Zillow, the average homebuyer can expect to pay around $3700 in closing costs, if they are responsible for the fees. The money you or the seller pays will cover several fees associated with the loan, including the application fee, courier fee, attorney fee, escrow fee and credit report.
Before you sit down for closing, it is critical that you understand the closing costs associated with your loan, and if you are required to pay any or all the fees. Additionally, if you are expected to pay the fees and they are over a certain amount, you may have to either bring along a cashier's check or arrange a wire transfer.
Not Reading All the Paperwork
After your offer is accepted and you begin the process of closing on your first house, you will be expected to fill out and sign a lot of paperwork. It is critical that you take your time and fill out every piece of paperwork accurately, and do not sign it or submit the paperwork until you are sure there are no errors.
Even something as simple as a misspelled name or a forgotten signature can extend the closing process for several days or weeks.
Taking on New Debt or Applying for Credit
Finally, one of the biggest mistakes that future homeowners make during the closing process is to take on new debt, or applying for credit. The allure of getting a credit card to purchase new furniture or buying a new car to park in your new driveway can prove detrimental to your loan process.
This is because any new debt or lines or credit will negatively impact your debt-to-income ratio. If the change is drastic enough, the bank could withdraw their mortgage offer, which will leave you scrambling to find a new lender.
The real estate closing process can be confusing, especially if you're a first-time homebuyer. If you have any additional questions about closing on your new home, don't hesitate to ask for real estate professional for assistance.