10 things new Home Buyers should NOT do
Here are some tips for first time home buyers. This doesn't have much to do with Home Equity loans and advice on it, but as the subject of my postings are related to the home buying industry, I thought I post this as a starter. Hope it helps.
10 Things NOT to do during the home buying process
1. Do not make a large purchase when you have good credit
If you just found that you have great credit, don’t be hasty to buy that new car that you always wanted. If you’re depending on a mortgage to move to your new home, then a major purchase might jeopardize that chance.
If you take on a higher car payment, the lendor 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. Talk to your loan officer before you make a large purchase, if your situation calls for you to make that big purchase.
2. Don't Change Jobs Unless It's Necessary
Consistent job history is a positive note to lendors. They aren't usually as nervous if you change jobs within the same field, but make sure you don’t put in your two weeks notice before you get the keys to your new house.
3. Do not give a direct deposit 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. Do not let your emotions run your decision
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. Do not wait for the last minute to switch utilities
You may be surprised at how many people wait until the last minute to change their utilities. Call your utility company and make sure that everything is working for when you need it to be active.
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. Make sure that you aren’t doing all the work when the agent should be doing it.
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--your closing depends on it.
10 Things NOT to do during the home buying process
1. Do not make a large purchase when you have good credit
If you just found that you have great credit, don’t be hasty to buy that new car that you always wanted. If you’re depending on a mortgage to move to your new home, then a major purchase might jeopardize that chance.
If you take on a higher car payment, the lendor 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. Talk to your loan officer before you make a large purchase, if your situation calls for you to make that big purchase.
2. Don't Change Jobs Unless It's Necessary
Consistent job history is a positive note to lendors. They aren't usually as nervous if you change jobs within the same field, but make sure you don’t put in your two weeks notice before you get the keys to your new house.
3. Do not give a direct deposit 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. Do not let your emotions run your decision
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. Do not wait for the last minute to switch utilities
You may be surprised at how many people wait until the last minute to change their utilities. Call your utility company and make sure that everything is working for when you need it to be active.
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. Make sure that you aren’t doing all the work when the agent should be doing it.
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--your closing depends on it.
posted by Kenichi | 1:19 PM
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