When it comes to buying a home, many factors come into play, creating opportunities for first-time homebuyers to make mistakes. It doesn’t matter if you are purchasing a newly built home or a fixer-upper, knowing what you’re getting into before you start house hunting is crucial. Avoid these four common closing mistakes that can completely derail your dreams of owning a home:
1. House Hunting Before Mortgage Shopping
No one likes talking about their finances, especially with a mortgage lender. But, it’s vital to know what your approved price range is before you get your heart set on a beautifully remodeled Victorian. Avoid this disappointment by getting pre-qualified or possibly preapproved before you start shopping. You may even be able to improve your credit and increase your loan amount before you apply if you only go through a mortgage pre-qualification first.
2. Opening or Applying for New Credit Accounts Before Closing
Even though you have gotten approved for a home loan doesn’t mean your credit is not off the hook from review. Believe it or not, opening a new credit account during the period between qualifying for a mortgage and getting the keys to your new home can ruin everything.
A few days to a week before finalizing the closing, your lender will recheck your credit. They will look to see if your score has fallen or if you have an increase in your debt-to-income ratio. These changes can impact your mortgage’s interest rate and associated fees, delay the closing date, or worse, cancel your loan opportunity altogether.
While it would be nice to take advantage of good deals on new appliances, furniture, and renovation supplies for your future home, wait until everything is finalized.
3. You Don’t Get a Home Inspection
Even if you are a millionaire, it isn’t worth risking all the unforeseen repairs you will have to pay for out of your own pocket by skipping a home inspection before closing. These inspections are crucial for uncovering serious issues in a home, like faulty wiring, cracked foundation issues, and even evidence of basement flooding. Then, you can exit the deal and get your earnest money back without being penalized if the seller refuses to fix the problems found.
While the fees associated with this inspection are your responsibility, it can save you tens of thousands of dollars in repairs and renovations in the long run.
4. Failing to Ensure the Closing Disclosure Matches Your Loan Estimate
Prior to closing on your home, your mortgage servicer must provide you with a closing disclosure. This is an important document that requires careful scrutiny once you receive it. It will list out all of the costs you will have to pay on your closing date, including:
- Down payment
- Itemized closing costs
- Loan details
- Provisions of your loan agreement
- Additional related information
When reviewing the several pages making this document, look closely at what charges you are responsible for, including junk fees added on after your initial loan estimate was made. If you see questionable changes or errors, immediately reach out to your lender, real estate agent, and/or attorney to rectify the issues. Because you typically receive this paperwork just a few days before closing, you might have your signing date delayed until these issues get corrected.
The Bottom Line
When you are ready to buy your first home, having already taken the time to educate yourself about the lending and buying process will minimize the mistakes you make along the way. A knowledgeable title company is one of your best resources to prepare yourself for this significant life milestone.
All Florida Title Company is here to guide you, provides full-service title services, and is attorney-owned, so you get sound legal advice and representation. You are our number one priority in everything we do on your behalf, and our owner, Attorney Marc Brown, personally reviews all of our client files from start to finish. So trust us to get your loan closed quickly and correctly so you can enjoy the excitement that comes with buying a new home and stress less.
At All Florida Title, we care about helping you stay informed throughout your real estate transaction. Have questions? Give us a call at 954-566-2200.