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The sellers accepted your offer to purchase. The home is officially under contract and you're counting down the days to closing. Don't worry. All will be well if you keep your cool and follow a few important guidelines.
1. Don't Make Another Major Purchase
You've just found out your credit is A+. So you've decided a new car would look fantastic in the driveway of your new home. If you're paying cash for the home go right ahead. But if you are depending on a mortgage to move in you'd best wait until after closing.
- An increase in your debt/income ratio reduces the amount of monthly income available for your mortgage payment. The bank may decide you cannot afford the home.
- Using cash for a purchase can be a problem too, since banks consider cash reserves when approving a loan.
If you must make a major purchase before closing, talk to your loan officer before you do it.
2. Don't Change Jobs
Banks like to see a consistent job history. They aren't usually as nervous if you change jobs within the same field, but it's better to stay put until the keys to the house are in your hand.
3. Don't Give an Earnest Money Deposit Directly to a FSBO Seller
It should go into a trust account. Some FSBO sellers don't understand that funds are a good faith deposit to be applied to your expenses at closing. I've heard many stories about sellers who spent the buyer's money prior to closing. When the transactions didn't take place for valid reasons--such as financing or repair problems, the buyers had to fight to retrieve their funds. Find an attorney who will hold the deposit for you until closing day.
4. Don't Let Your Emotions Take Over
There are many areas where that statement applies, but one of the most important involves the home inspection. Be realistic. No home is perfect, especially older homes. Don't let the seller's refusal to do a small repair kill the deal on a home you truly love. It's not at all unusual for new owners to take care of some things themselves.On the other hand, don't fall so much in love with the house that you'll buy it no matter what needs to be done (unless you're absolutely sure you can handle it emotionally and financially). Decide what type of repairs you can realistically handle, then stick with the decision.
5. Don't Forget to Switch Utilities
That sounds simple, but you'd be surprised how many people forget to apply for utility service at their new home. Call the companies involved as soon as you have a contract. Find out how many days lead time they need to turn on the new service, then get back with them when you have a firm closing date.
6. Don't Forget About Hazard Insurance
A no-brainer, right? But it's another often-forgotten task that buyers scramble to take care of at the last minute. Your lender will require an insurance binder for the new home at or prior to closing. Take care of it right away.
7. Don't Become Best Friends with the Seller
I'll get some flack on this one. It's great to be friendly, but don't get into too many long discussions with the sellers because personality conflicts often cloud judgments. I've had selling clients refuse to make even small repairs because something about the buyers turned them off. And remember, this is their home. You're no doubt excited about moving in, and if you didn't like the house you wouldn't have offered to buy it. But you'll make changes--everyone does. A casual statement about "ripping up that ugly carpet" might be hurtful enough to keep the seller from negotiating with you for needed repairs. Keep it to yourself.
8. Don't Panic if the Appraisal Comes in Low
At least not at first. There are some things you (and your agent) can do to correct the problem. Study your options.
9. Don't Go It Alone
If you're working with an agent it's the agent's duty to help you make it to closing. Find out how your agent should be helping you.
10. Don't Ignore the Requirements
Know what is expected of you and take care of it. For instance, a Certificate of Eligibility is required to move forward on a VA loan. That's something you must handle yourself. If the lender asks you for something, get it to them immediately.
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