Top Mistakes to Dodge When Closing on Your Dream Home

Closing on a house can feel like navigating a maze. It’s thrilling, stressful, and, let’s be honest, a bit daunting. Whether you’re a first-time buyer or a seasoned homeowner looking to upgrade, there are common missteps that can derail your closing process. Knowing these pitfalls and steering clear of them is vital to ensure a smooth transition into your new abode.

In this blog post, we’ll cover the critical mistakes that buyers and sellers should avoid when closing on a house. Let’s dive in!

Mistakes to Avoid as a Buyer

Changing Your Job

One of the biggest no-nos during the home-buying process is changing your job. Lenders want to see stability and a steady income, and switching jobs right before closing raises a red flag. A survey from the National Association of Realtors found that 74% of lenders prefer applicants who have been with their current job for at least two years.

If you’re contemplating a career change, hold off until after you’ve finalized the purchase. A reliable financial background is crucial for your mortgage approval.

Taking On New Credit

Beating the credit card blues? Great! But wait before you open that shiny new credit line or finance a fancy new car. Taking on new credit can alter your credit profile and impact your debt-to-income ratio.

For example, if your current monthly payments total $2,000 and you decide to take out a car loan of $400, your debt-to-income ratio could jump from 25% to 28%, potentially jeopardizing your loan approval. Stay put with your current financial situation until the ink is dry on your new home's purchase agreement.

Missing Current Bill Payments

It’s easy to let a couple of bills slide when you’re caught up in the whirlwind of closing on a house. However, this is a huge mistake! Missing current bill payments can harm your credit score, which typically impacts your mortgage rates. According to FICO, every missed payment can drop your score by 20 to 50 points.

Keeping your credit score in good standing is essential during this time. Set up reminders or automatic payments to ensure that nothing falls through the cracks right before closing day.

Making Major Purchases

That new furniture set or the latest gaming console might be calling your name, but resist the temptation! Major purchases can lead to a sudden change in your financial profile.

Lenders prefer to see consistency in your financial status. For example, if you increase your credit card balance just before closing, it could raise your debt-to-income ratio, leading to complications in your approval. Wait until after closing to indulge in any big-ticket items. Your new home will still be there, and your budget will thank you later.

Common Seller Mistakes

Setting an Unrealistic Sale Price

As a seller, it can be tough to part with a property you’ve cherished. However, setting an unrealistic sale price can backfire. Data from Zillow shows that homes priced 10% above market value take over 3 times longer to sell than those priced right.

Do your homework and research comparable homes in your area. A reasonable price will attract serious buyers, bringing you closer to closing that sale!

Listing the House at the Wrong Time

Timing can make all the difference in real estate. Listing your home during a buyer’s market, with plenty of available homes, usually means less competition and lower prices. A report from the National Association of Realtors indicates that homes typically sell about 15% faster during a seller’s market.

Conversely, listing during a seller’s market can attract multiple buyers eager to make an offer. Research seasonal trends and market conditions to decide the best time to list your property.

Choosing an Unreliable or Inexperienced Real Estate Agent

Selecting a real estate agent is like picking a guide for a challenging hike. You want someone knowledgeable and experienced who can navigate the terrain with you. A well-rated agent can often sell homes 20% faster and for up to 10% more than their less experienced counterparts.

Choosing an agent without the right experience or reputation might lead to delays or miscommunication. Do your research, read reviews, and ask for recommendations to find the perfect fit.

Making the Most of Your Closing Experience

Closing on your dream home should be a celebration, not a source of stress from avoidable mistakes. By watching your job status, credit, payments, and purchases as a buyer, along with grasping market trends and selecting a skilled real estate agent as a seller, you can pave the way for a smooth closing experience.

The real estate journey is exciting, but it comes with responsibilities and thoughtful decision-making. Take the time to educate yourself and work with reliable professionals to ensure that your home-buying or selling process is as seamless as possible. Happy house hunting, and may your new home bring you years of joy!