The closing process is exciting for all potential home buyers. It’s the last hurdle before you finally have a home to call your own. However, that excitement can often lead to mistakes for a first-time home buyer during the closing process.
If you are working with a skilled real estate and title agent, they will walk you through the closing do’s and don’t’s so that you don’t jeopardize the purchase of your home. So if you want to avoid these first time home buyer mistakes, make sure you avoid these scenarios during the closing process. You can also contact Walnut Ridge Title for more details on what happens at the closing table.
5. You Deposit “Unsourced Cash”
The first thing that can really mess with your closing is depositing unsourced cash. When you work with a lender, you’ll have to disclose pertinent information such as income, bank statements, and credit history. This helps in determining your loan amount so that you can purchase your home.
However, if you were to suddenly deposit unsourced cash, whether it’s for your down payment or closing costs, this will put a pause on the entire process. Depositing money into your account from an unspecified source with raise flags with your lender, which might mean the loss of your loan. This is a very common first-time homebuyer mistake, but one that can set you closing date further back than you anticipated.
4. You Buy Big Ticket Items
Another mistake that may occur during a first-time homebuyer closing process is spending excess money. Just like depositing unsourced cash, spending money can cause even more issues with your lender or title company.
Big tickets items (i.e. a car) will offset your predetermined loan amount. You do not want to spend excessive amounts of money during the closing process. Likewise, you also want to avoid running your credit for any reason. This is a surefire way to stall your home purchase and it can take weeks or months to remedy.
3. You Don’t Buy a Home Inspection
A home inspection is a process that all homeowners should agree to. The inspection will point out any issues with the property. In turn, this allows buyers to negotiate closing costs, therefore, saving you time and money.
Some eager purchasers will skip this step during the closing process. This is a mistake because you essentially leaving money on the table. An inspection also alerts you to any faults in the home such as mold, a bad roof, or other pricey issues that you don’t want to deal with after the closing process.
2. You Spend Your Down Payment Money
Believe it or not, this is something that occurs quite often with home buyers. Nine times out of ten, a down payment is necessary if you want to close on your home. You will need to calculate the down payment money well before you sit down at the closing table in order to save appropriately.
There are numerous ways to outsource your down payment money. However, some first time home buyers make the mistake of calculating that money into their total approval amount. For example, if you get a loan for $100K and 3% of that needs to be for a down payment, you should be looking for properties under 97K so that you have down payment money on hand.
1. You Don’t Read the Contract in Full Before the Closing Process
And the #1 first time home buyer mistake is failing to read the contract in full. Your contract will be looked over by your real estate and title agent, but as the buyer, you are ultimately responsible for accepting what is said in that contract. You don’t want to be surprised by hidden fees or stipulations because you didn’t do a proper read through on your closing contract. Buying a home is a huge investment— do your due diligence by making yourself aware of your full agreement.
Have more questions? Contact Walnut Ridge Title at one of our Ohio offices.