Top 6 Mistakes That Can Sabotage Your Dream Home Purchase

Introduction

Buying a home can feel like a dream come true, especially in beautiful Lake Havasu City. However, it’s crucial to navigate the buying process carefully to avoid common pitfalls that can derail your plans. In this blog, we’ll explore the top six mistakes that home buyers often make and how to steer clear of them.

Mistake #1: Changing Jobs Right Before Closing

Imagine you've found your dream home, and everything seems perfect. However, if you decide to change jobs just before closing, it could spell disaster. Lenders look for stability in your employment history. A sudden career change, even for a better position, raises red flags.

When I was purchasing a home, my husband received a job offer just a week before closing. Although he was staying in the same field, the lender had to restart the verification process, causing delays and unnecessary stress. To avoid this, consult your lender before making any job changes during the home buying process. It's best to wait until after you have the keys in hand.

Mistake #2: Making a Big Purchase

It’s tempting to imagine how your new living room will look with that shiny new couch or car parked in the driveway. However, making large purchases before closing can jeopardize your loan approval. Lenders assess your debt-to-income ratio, and any new debt can affect your eligibility.

For example, if you buy a car before closing, it could lead to your loan being denied, leaving you with a new car and no home. To avoid this, hold off on any significant purchases until after you’ve closed. Remember, escrow typically lasts only 30 to 45 days, so you can wait.

Mistake #3: Opening or Closing Credit Card Accounts

Managing your credit is vital during the buying process. You might think you’re being responsible by closing an old credit card or opening a new one for rewards, but these actions can backfire. Your credit score is not just about your debt but also your credit history and utilization.

For instance, a client of mine opened a new credit card for a discount, which dropped their score below the lender's threshold. We had to renegotiate terms, which was a challenging process. To avoid this, maintain your financial profile from pre-approval until closing. No new accounts or closures during this time is the safest route.

Mistake #4: Missing Payments or Overspending on Credit Cards

Life can be unpredictable, leading to missed payments or overspending. However, even one missed payment can significantly impact your credit score, potentially costing you your loan approval. Additionally, high credit card balances can raise concerns for lenders regarding your ability to manage debt.

To prevent this, set up autopay for all your bills and adhere to a strict budget during the home buying process. Avoid any last-minute financial surprises that could lead to a denial. Remember, underwriters take a close look at your financial behavior, so keep everything in check.

Mistake #5: Not Communicating Changes with Your Lender

Transparency is key when buying a home. Keeping secrets from your lender or real estate agent can lead to complications. Lenders need to understand your entire financial picture, and any significant changes—like unexpected bonuses or large deposits—must be communicated immediately.

In one case, a savvy buyer decided to switch from a cash payment to financing without informing anyone. This change could have led to the seller canceling the deal. Thankfully, we managed to keep the transaction on track, but it could have easily turned into a disaster. Always keep your lender and agent informed to ensure a smooth process.

Mistake #6: Buyers and Sellers Talking Directly Without Their Agents

While it may seem harmless to have a casual conversation between buyers and sellers, it can lead to misunderstandings and unrealistic expectations. Emotions can run high, and promises made verbally often don’t translate well into written agreements.

For example, I once had a seller who made verbal promises to a buyer about repairs without consulting me. This led to the buyer making unreasonable requests, creating confusion and tension in the process. To avoid such issues, let your agent handle all communication. This keeps everything documented and legally binding, ensuring a smoother transaction.

Conclusion

In summary, the top six mistakes that can sabotage your dream home purchase are entirely avoidable. With a little planning, patience, and teamwork with your lender and agent, you can navigate the home buying process successfully. Remember, buying a home is a journey with its ups and downs, but avoiding these common pitfalls will make the experience much smoother. If you have questions about buying a home in Lake Havasu or need assistance in your journey, feel free to reach out. We’re here to help you every step of the way!