Finally! You’ve spent every weekend for three months driving around town with your REALTOR looking at every home for sale in your pre-approved price range. After painstakingly narrowing your list of potentials down to your short list of possibilities, you’re ready to write a purchase offer on what could very well be the most perfect home in the world. Congratulations!
But not so fast…don’t plan the housewarming party just yet.
There are several common mistakes new home buyers make that can LITERALLY lose your loan before you sign the papers. Let me help you eliminate those hazards so you can close that loan and begin painting all the walls pink if you want.
1. SURVIVE THE NEGOTIATIONS
Writing an offer does not mean you’re buying that house! Once a complete offer has been submitted, the seller has three choices: reject it entirely, accept it as is, or negotiate. Often times, when housing inventory is low, a seller might receive multiple offers; be prepared with your “top dollar” bid amount and be prepared to stick to your guns if need be.
2. KNOW THE IMPORTANT DATES IN YOUR CONTRACT
This is a good thing to ask your REALTOR to provide you as soon as you’re under contract. I give my clients a list of dates that are contingent specific (Due Diligence, Appraisal Contingency, Finance Contingency, Closing Date, Final Walk Through, etc), and I create a calendar event, inviting them. As each date changes, and they often change, I update the calendar event so my client has it as well. If your agent doesn’t do all this, you can be sure they are at least turning in the important dates to their office as soon as you’re under contract; ask them for the dates that are important…then keep up with them yourself!
3. DO YOUR DUE DILIGENCE
If your offer was accepted and you’re under contract on your dream home, you, as the buyer, still have a couple safety nets in place to protect you in the event things with your potentially-new abode aren’t as presented. In Georgia and many other states (always check with your local real estate expert) a buyer has a negotiated period of time called Due Diligence; it’s a set time frame allowing the buyer to conduct inspections to be sure the house is fit for his needs; you can read more specific information in my post, “What’s This Due Diligence Period I Keep Hearing About?”
Basically, do your work to find out if this is the house for you. During DD in Georgia, a buyer can change her mind for any reason or no reason at all. It’s a precarious time for the seller because he is bound to the contract, but the buyer has a built in “out” for a few days.
4. DO NOT PROCRASTINATE
I know what you’re thinking, and I, too, do my best creative work when I procrastinate, but buying a house is not creative work. There are many more people than you can imagine involved with this transaction from the moment the ink dries on the contract: inspectors, appraisers, two agents, sellers, families on both sides of the transaction, lenders, loan orginators, pre-closers, and this list goes on.
When you delay, it slows the process down, sometimes significantly.
So if your lender asks for a document, get it as soon as you can. If your agent needs your signature; sign as quickly as possible. The more determined you are to get in that house and the more responsive you are to the needs of the transaction, the more likely it is you’ll be arranging a moving truck within a month and a half.
Remember how important you are to this entire process!
5. PUT A LOCK DOWN ON YOUR FINANCES!
Seriously! Don’t buy anything. Don’t apply for new cards. Don’t pay back old debts. Don’t accept payments for debts owed you. Don’t transfer money from one account to another. Don’t quit your job.
The golden rule to remember here is to keep everything exactly as it was the day your pre-approval was granted. So it’s okay to continue doing what’s normal financially for you, just don’t do anything new without first checking with your lender. You are paying him for his services (loan fees, etc) so use his expertise to stay on the path to home ownership.
I can relay to you a story of a family I worked with who got denied for their pre-approved loan a week before closing because they applied for a store credit card to save 20% on their purchase that day (which was less than $50 in savings). They lost their home loan because of one little weak moment. I had advised them against these things, but it seems too far-fetched to be real to some buyers. Unfortunately it’s real.
Your credit is being checked multiple times during the closing process.
Don’t freak out; the first pull is hard and the others are soft inquiries. But imagine the lender wants to see the same financial picture you presented him when you applied, so don’t do anything out of the ordinary until after you sign those papers!
So that’s it! It’s not terribly difficult is it? Don’t forget to stay in touch with your agent and let her know of any changes on your end. Are you going out of town? Let her know. Working with a professional REALTOR will make the process run more smoothly, so trust the agent you hired and keep her in the know.
Follow this advice and soon you and your friends will be sitting on your gorgeous new tufted chaise, toasting your new home, while watching “Property Brothers” on your sleek new 70″ Ultra HD Smart TV! …just don’t buy any of that until AFTER you close!
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