Buying your first home is undoubtedly an exciting life event for anybody. But even after you've been pre-approved for a home loan, found your dream home, and agreed on a purchase price with the seller, it's not time to start celebrating just yet. In fact, there are a few huge mistakes you'll want to be careful to avoid before you close.
Missing Any Payments
Your mortgage pre-approval was made based on your credit score and financial standing at your time of application. However, your credit will be run again prior to the finalization of your mortgage approval. Missing even one payment (such as a credit card payment or car payment) before this time can have a dramatic impact on your credit score. In fact, you could even be denied your original mortgage terms as a result, which could put your entire home purchase in jeopardy.
Making Large Purchases
The same goes for any large purchases made before closing on your home. All too often, prospective homeowners will get excited when their offer gets accepted; they immediately want to run out and buy new furniture and decorations for the house. But when you open a new charge card or charge an excessive amount to your existing cards to pay for these items, you could end up with a significant change in your debt-to-income ratio, which is used in determining your final approval for a home loan.
Failing to Consider All the Costs
So you know your monthly mortgage costs, and you know they're within your budget. But what about the other expenses associated with owning a home? Are you prepared to pay for home insurance? What about private mortgage insurance? Homeowner's association dues, maintenance costs, and other relevant expenses can also add up quickly as well, so it's important to consider these before closing.
Foregoing a Home Inspection
Last but not least, you should never decide to waive your right to a home inspection before closing on your home. The few hundred dollars you spend to have the home inspected will be more than worth it in the long run, especially if the inspection indicates a potentially expensive problem with the home. In fact, depending on the type of mortgage you're taking out, you may even be required to have a home inspection done as a stipulation of your home loan. Either way, a thorough home inspection can save you a great deal of stress and money down the road.
For a local real estate agent, contact a company such as Chris Calhoon Real Estate.