Buying a new home can be a daunting task, especially if it is your first home. Buying a new home is exciting but full of complexities. Many home buyers are not fully prepared to make the right purchase decision. However, it is likely to be one of the largest financial transactions you will ever make in your life. That's why you must be aware of the home buying process and try to avoid as many mistakes as you can before you buy your dream home.
Table of Contents
- 1- Don’t Make A Major Purchase.
- 2- Avoid Choosing the Wrong Mortgage
- 3- Don’t Change Your Job.
- 4- Maintain Your Finances State
- 5- Avoid Buying A New Car
- 6- Don’t Miss Loan Payments
- 7- Avoid Buying Household Goods on Credit
- 8- Do Not Make Large Cash or Bank Account Deposit
- 9- Don’t Lie on Your Loan Inquiry
- 10- Avoid Letting People Make Inquiries in Your Credit
- 11- Avoid Spending Your Closing Costs
- 12- Understand the Real Estate Agent’s Role
- 13- Don’t Go Beyond Your Budget
- 14- Avoid Ignoring Lender’s Requirement
There are countless ways that can lead to messing up the home buying process. You may have found your dream house, got a pre-approval, and have made an offer. But this is not it. There are a lot of things that can mess your overall home buying process. Making mistakes is not an exception if you have never bought a home before. Here is a complete guide on what not to do before buying a house.
1- Don’t Make A Major Purchase.
One of the biggest mistakes made by most homeowners is buying or making a major purchase while they are on their way to buy a new home. If your new home buying process depends on the mortgage, it is best to wait until after the closing to make a major purchase.
2- Avoid Choosing the Wrong Mortgage
Choosing the right mortgage is one of the essential tips when you are focusing on what not to do before buying a house. It is necessary to have your loan pre-approved before you go on house hunting. Moreover, you should pick your finance package carefully. Make sure to visit a real estate agent or broker who has access to a wide range of mortgage lenders and finance products.
3- Don’t Change Your Job.
One of the things which the lender makes sure to look at is your employment history. You should avoid changing your job when you are in the middle of purchasing your new home. The lenders want to make sure that you are financially stable and easily make your loan payments. You make yourself less appealing to the lender if you change your job right before getting the loan to buy your new home.
4- Maintain Your Finances State
The pre-approval of a lender for a loan is based on your state of the finances. It is important that you maintain that state to gain the trust of your lender. Always wait to undergo any financial change until after you have gotten the mortgage. The buyers usually make this mistake of shifting their money around. Avoid making this mistake and keep your financial state stable before closing.
5- Avoid Buying A New Car
It always looks tempting to buy a new car while also purchasing a new home. But this is definitely what not to do before buying a house. The feeling of knowing that you are finally buying a new home wants you to do everything to improve your life. The loan pre-approval is based on the state of your credit. The debt that the car purchase will bring may not let you get a loan for your home.
6- Don’t Miss Loan Payments
You need to make sure that all your loans are paid if you have any. The lender will look at the credit before finalizing your mortgage. If you miss any payments, it can lead to losing the loan to buy the new home.
7- Avoid Buying Household Goods on Credit
You may want to put the best household golds in your home. Buying new furniture or household goods can change your credit state, which can lead to loss of your loan approval. You should wait for closing to buy any household goods.
8- Do Not Make Large Cash or Bank Account Deposit
Do as much as you can to make a lender scrutinize your finances. If the money appears suddenly in your account, it can make the lender uneasy. The lender may back out if he observes any unusual activity with your bank account.
9- Don’t Lie on Your Loan Inquiry
Lying on your loan application form is a fraud, and if your lender finds out that you mislead in any way, you can almost lose your loan. Be very careful about the information you provide in the loan application. Lying or even stretching the truth is definitely a no while applying for a mortgage.
10- Avoid Letting People Make Inquiries in Your Credit
Whenever you apply for any service, whether a loan or cell phone service, the company makes sure to make a credit inquiry to determine if you are a safe risk. However, if more inquiries are made, the lender may assume that you are trying to get more debt, even if you are not. Avoid letting anyone make inquiries to your credit.
11- Avoid Spending Your Closing Costs
Money might be tight while buying a new home. The money you saved for the closing costs always looks tempting at that time. Make sure not to spend the money when you are at the point where you almost have your new home.
12- Understand the Real Estate Agent’s Role
You need to understand a real estate agent's role by getting through the real estate agent seller checklist. The selling agent cannot work in favor of both the lender and the buyer. Going through the real estate agent will help you know a lot about the agent.
13- Don’t Go Beyond Your Budget
Avoid going beyond your budget. It is a common mistake made by many. You may stick with putting up more money to buy your dream house or risk losing it when you know that the seller will not cooperate and drop the price.
14- Avoid Ignoring Lender’s Requirement
Make sure to understand the requirements of a lender. Ask the questions and provide the required data as soon as possible. Besides, find a lender who can answer all your queries and the one who is available when you need to ask anything.