Common Mistakes People Make When Buying a Home

The more experience you have with purchasing real estate, the more you’ll learn about the complex process. Between the confusing jargon and the logistics of buying a house, it’s all too easy to make the wrong move or end up in an unwise investment. And if you are a first-time buyer, then it’s always wise to hire a mortgage agent you trust to assist guide you down the twists and turns on the exciting journey to homeownership. 

Many first-time homebuyers are ignorant of the uncertainty of the home buying process, which often leads to making bad mistakes. These errors can cost thousands of dollars, moments of frustration, or even heartbreak as they lose out on their ideal home. Therefore, it’s essential to stroll carefully and seek advice from an experienced agent when buying a home.

So, to help you avoid some basic mistakes that could prove to be costly, SHIRL FUNK has put together a list of the most common mistakes made by first-time home buyers and how to resolve them.

1. Changing jobs
Suppose you got pre-approved for a mortgage based on a regular income and employment; any shifts in the interval before closing can be a red flag and delay your closing. It could affect your ability to qualify for a mortgage loan. Your recurring payment record gets disrupted when you switch jobs, mainly if you take a lower-paying job. Whenever possible, lenders suggest waiting to change careers until after your loan closes. If that’s not doable, tell your lender right away.

2. Making a vehicle purchase
Purchasing a house is a big enough purchase, so focus on that. It would help if you weren’t going for a car or opening a new credit card. A new car loan payment could hurt your chances of qualifying for a mortgage and create chaos for the underwriter. It can even delay your closing too. Once you’ve completed the house loan, make your next buying decision. So you may want to wait at least six months between purchases to give your score enough time to improve.

3. Excessive use of credit
Whenever you apply for a mortgage, your lender will review your credit and calculate your debt-to-income ratio to know if you can afford the house payments. Excessive use of your credit cards when applying for a mortgage could affect your debt-to-income ratios, essentially pushing your debt service ratios too high, and you would then be declined for the mortgage. To avoid this, pay down your existing balances, if you can, and pay your bills on time and in full every month.

4. Buying furniture before your mortgage closing date 
It’s jeopardizing your loan if you finance your new furniture before completing the final step in the mortgage process. Keep your credit and finances stable until you close on your home. Use cash instead, or wait to buy new furniture or television until after closing. Also, you want to get a sense of how your budget will take your new homeownership costs. You might consider waiting a few months before adding more monthly expenses for significant investments to the mix.

5. Credit checks or applying for new credit
Lenders analyze your score when you apply for a mortgage and often at least one more time before the closing date. A mortgage lender wants to make sure nothing has altered in your financial profile. And if your score drops, this could also get you a decline on your mortgage application. Any new loans or credit card bills on your credit statement can risk the closing and final loan approval. Buyers, especially first-time buyers, often learn this lesson the hard way. Keep your credit score high and apply for new credit. 

6. Using your closing costs for other expenses
Spending all of your savings on closing costs is one of the biggest first-time homebuyer mistakes. Purchasing a home also comes with substantial upfront costs, such as the down payment and closing costs, so you will want to ensure you have money left for crises and other unexpected expenses after you close on your home. Also, the lenders require proof of closing costs in your bank account before the mortgage closing, and if you should spend those funds, the lender could decline the mortgage. 

To avoid these and other mortgage mistakes, reach out to SHIRL FUNK. I worked for two mortgage brokerages over the first few years before moving to Dominion Lending Centres, where I stayed for five years, building great contacts and beautiful friendships. I love helping my clients find the right mortgage and guiding them through the home-buying process. I ensure you receive the best rates, mortgage conditions, details, and customer service.

We serve clients across Winnipeg, Steinbach, Brandon, Portage la Prairie, Beausejour, Niverville, Winkler, Powerview-Pine Falls, Saint-Malo, Morris, Carman, Altona, Arborg, Stonewall, Selkirk, Oakbank, Ste. Anne, La Broquerie, Grunthal, Gimli, and all over Manitoba.

I’m here to solve all your queries and make the home-buying journey as smooth as possible. For a comprehensive list of services I provide, please click here. For any topics related to our mortgage offerings, please feel free to contact me by clicking here.