Sometimes, the excitement of owning a home can lead to costly mistakes, especially when you are a first-time homebuyer. Home buying is a complex process that involves a lot of paperwork and procedures, meaning you should be well prepared to protect your investment. In addition, you can ensure a successful purchase if you avoid common mistakes in the buying process, including during the closing stage.
Let’s see some mistakes that homebuyers make when closing on a home.
Not Reading the Contract Word by Word
Even if you are not used to reading huge documents, you should take your time when you receive the contract document and ensure that you understand every bit before signing. Remember that a home purchase is an important step in your life, and any mistake could lead to huge financial problems.
Also, to avoid regrets in the future, ask questions if you have any and ensure that you have a copy of all the documents used in the purchase process.
Not Disclosing Major Life Changes to the Parties Involved
If anything that would change your finances happens before the closing date, notify all the parties: the lender, the seller, the seller’s agent, and your agent. For example, if you lose your job or have a job change days before the closing date and after pre-approval for a mortgage, you should inform the lender to enable them to restructure your mortgage deal.
You may think they won’t find out, but lenders will check your employment status again on the closing date and may cancel the deal until they’re sure you can repay the money.
Using Different Versions of Your Name in Documents
Mismatching names can lead to closing delays, as you have to redo the paperwork to match the names on your government ID or get a government ID with the names on the paperwork. Therefore, to avoid last-minute confusion, ensure that the names on each document are the full names on your government ID. Nicknames and stage names should not appear in any of the documents.
Knowing Nothing About the Closing Process
To ensure a smooth flow of events on closing day, you should be aware of the closing process, your role in the process, who to come with, and the documents required. You should also be aware of the location of the closing to avoid delays.
If you are a first-time homebuyer, research the steps of the closing process or ask your agents all the questions you may have about the closing process.
Making Big Purchases on Credit After Pre-approval
Since a pre-approval does not guarantee that you will get a mortgage, you should refrain from making purchases that negatively affect your debt-to-income ratio.
Even after pre-approval, the lender will vet your finances to ensure that you can repay your mortgage loan. If you use your credit card to purchase expensive items, like a car, your debt-to-income ratio may move from good to bad, prompting the lender to reject your mortgage application.
Forgetting to Prepare for the Closing Costs
Most homebuyers make the mistake of carrying a personal checkbook instead of a cashier’s check on closing day or forget to set up a wire transfer. These mistakes lead to further delays since no closing agent will accept a personal check, as it does not guarantee that the funds are available. Some agents can also reject a cashier’s check because the funds may take longer to appear in their escrow account.
The complex home buying process ends with closing, making the closing process a crucial part of the homeownership journey. Despite being the last step, all your efforts can be wasted if you make any of the above mistakes. Therefore, you should avoid these mistakes to successfully complete your home closing process.
At Sure Title Company, we are committed to ensuring that our clients do not make mistakes that could cost them money. Contact us today at 901-881-0606 for inquiries and more about our services.
Blog articles are purely for educational purposes and provides generalized information of the topic(s) covered. These articles should not be considered as legal advice.