The first-time homebuyer process is a lengthy one, and if you’re not careful, there’s a lot that can throw you off-track.
Are you on the hunt for a new home? Want to make sure your purchase goes off without a hitch? Then take steps to avoid these all-too-common first-time homebuyer mistakes:
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1. Home insurance hiccups
Your lender is going to require an adequate home insurance policy before they’ll close on your loan. If you forget to secure one or your policy start date doesn’t align with your closing, it could throw things off schedule.
There also may be cases when a home isn’t insurable. This might occur if the previous homeowner made an insurance claim for some sort of high-risk condition — like mold or severe water damage.
2. Low appraisals
Not many first-time homebuyers have a good understanding of appraisals. To put it simply, if your appraisal comes in lower than your offer, it could send things back to square one. You’ll either need to pay the difference, renegotiate with the seller or back out of the deal entirely. Your lender won’t cover more than the appraised value.
To prevent this, always do your research before submitting an offer. Look at comparable sales in the area and ask your agent to help you determine a right-sized bid that aligns with those numbers.
3. Credit problems
Many lenders will re-check your credit just before closing on your loan. This can be problematic if you’ve made any major purchases in the last few weeks or if you’ve applied for other loans or credit cards in that time.
Fortunately, this is an easy one to avoid. Just keep a tight rein on your spending in the weeks leading up to your home purchase, and save big-ticket buys like furniture and new cars until after you’ve closed on your loan.
4. Errors on homebuyer loan docs
If you spot an issue on your final closing disclosures or your name is misspelled on your loan documents, it could delay your closing. Your lender will need to amend the paperwork before it can be signed and notarized.
As a first-time homebuyer, it’s critical to review any documents you receive from your lender right away. If there’s an error, report it to your loan officer as soon as possible.
5. Problematic walkthroughs
Before you close on your loan, you’ll have the opportunity to walk through the house one more time, making sure any repairs you requested were done and that the owners cleared out their property and left the place in good condition.
If that’s not the scenario you walk into, you’ll have to work with your agent to resolve the issue. They may need to ask for closing cost credits to help you cover any additional repairs, cleaning or trash removal services that might be necessary due to the seller’s negligence.
Be a proactive first-time homebuyer
As a first-time homebuyer, you want your home purchase to stay on track, and it’s important to be proactive as you approach the big day. Keep your spending in check, attend your walkthrough as early as possible and be thorough when reviewing your loan documents. The quicker you catch a potential issue, the less likely it will derail your transaction.