Ten Things Home Buyers Should
Avoid Doing Before Closing on a Home
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
Not quite. Nothing is certain
until the keys are in your hand and the deed is recorded.
There are still hurdles to get past before it's yours, and
your actions between now and closing can create headaches,
slowdowns and even stop the transaction.
1. Don't Make a Major
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 that car.
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
can't 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
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 house is yours.
3. Don't Give an Earnest Money Deposit Directly to a For
Sale By Owner Seller
good faith deposit should go into a trust account. Some
for sale by owner sellers don't understand that funds are
not their to spend until 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 a home 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 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. Don't Forget to 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
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. Be sure your
agent schedules a final walkthrough just before closing.
10. Don't Ignore 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--moving into your new home
depends on it.