“Closed” and “approved” are two words that are commonly misunderstood when dealing with real estate.
Most buyers will be jumping for joy to receive notices with those words attached, keep in mind that the purchase of your home isn’t 100% secure. Without proper guidance, it’s entirely possible for new buyers to make seemingly innocent mistakes that can cost them their dream home.
According to the National Associations of Realtors, 32% of closing delays come from financing issues. You may believe you have all your ducks in a row, but anything that can affect your pre-approval means terrible news for closing on a home – especially in this crazy Ottawa real estate market.
Here are 8 things you should NOT do before closing on your dream house:
1. Avoid Big Purchases
Whether you’re planning on buying or leasing a new car, furniture or an investment property, now is not the time to spend money when negotiating the purchase of a home. Pre-approvals are provided on the basis of maintaining a current level of debt and income prior to the home loan. Adding additional loans, from say a car, or even a new TV changes the agreement.
Even having kids should be on hold for the time being, as they are a huge expense and can change the outcome of your pre-approval.
2. Establishing New Credit
Mortgage lenders are primarily looking at your debt to income ratio. Anything that increases your debt or drops your income can put your closing in danger. Applying for additional credit cards tells loan officers you’re looking for additional financial support. Overall, any newly issued credit will affect your ability to make mortgage payments and should be avoided.
3. Increase Credit Limits
The same with establishing new credit, increasing your credit limit tells mortgage lenders that you require further financial assistance and may be having trouble meeting your current obligations
4. Late Paying Your Bills
Paying your bills late can happen from time to time, but should be avoided at all costs during the closing process. Anything that affects your credit report, like paying bills late, can cause you to lose your financing when applying for a mortgage.
5. Close Bank Accounts
It doesn’t matter how long you’ve been with your current bank, leaving that bank will put the closing on your home in jeopardy. Closing and opening up new bank accounts is a red flag for mortgage lenders. Even if your intentions are pure, they may think you’re trying to shuffle funds around or navigate hidden debt that isn’t recorded.
6. Quit Your Job
Even if you’re changing jobs for more pay, you will be delaying the closing process. Your history of job stability and employment length at your current job are two factors that are closely reviewed when applying for a mortgage loan.
7. Skip On A Home Inspection
Skipping on a home inspection is a big no-no. A home inspection isn’t only for your benefit but for the mortgage lender as well. The home inspection report tells the lender what repair costs will be needed due to the home’s condition. Avoiding a home inspection doesn’t give lenders a full picture of potential fixing costs.
8. Over Bid On A Home
Don’t bite off more than you can chew! With the current highly competitive Ottawa real estate market forcing buyers to push their offers over asking price, you, your real estate agent and broker need to keep in mind how high you can bid without financial risk. Even though the threat of losing your dream home is stressful right now, you’ll be paying for it later if you overbid.
Agents Send You In The Right Direction
It’s crucial that you’re communicating with your real estate agent and mortgage broker. But above all, you trust their knowledge and judgement. At Paul Rushforth, our experienced and committed professionals will set you in the right direction, laying out every contingency and potential pitfall to avoid when trying to lock down your dream home.
If you’re looking to buy in the Ottawa area or need a second opinion, contact one of our representatives, and they’ll get you started on your buying journey.
Call Us At 613-788-2122 or Contact Us Online