The closing process is exciting for all potential home buyers. It’s the last hurdle before you finally have a home to call your own. However, that excitement can often lead to mistakes for a first-time home buyer during the closing process.
If you are working with an experienced real estate and title agent, they will walk you through the closing do’s and don’t’s so that you don’t jeopardize the purchase of your home. So if you want to avoid these first-time home buyer mistakes, make sure you avoid these scenarios during the closing process. You can also contact Eques Title for more details on what happens at the closing table.
5. You Deposit “Unsourced Cash”
The first thing that can mess with your closing is depositing unsourced cash. When you work with a lender, you’ll have to disclose pertinent information such as income, bank statements, and credit history. This helps determine your loan amount so that you can purchase your home.
However, if you suddenly deposit unsourced cash, whether for your down payment or closing costs, this will pause the entire process. Depositing money into your account from an undetermined source raises flags with your lender, which might mean the loss of your loan. Unsourced cash is a common first-time homebuyer mistake and can set your closing date back further than anticipated.
4. You Buy Big Ticket Items
Another possible mistake during a first-time homebuyer closing process is spending excess money. Like depositing unsourced cash, spending money can cause issues with your lender or title company.
Big ticket items (i.e. a car) will offset your predetermined loan amount. You do not want to spend excessive amounts of money during the closing process. Likewise, you also want to avoid running your credit for any reason. This is a surefire way to stall your home purchase and can take weeks or months to remedy.
3. You Don’t Buy a Home Inspection
A home inspection is a process that all homeowners should agree to. The inspection will point out any issues with the property. In turn, this allows buyers to negotiate closing costs, therefore, saving you time and money.
Some eager purchasers will skip this step during the closing process. This is a mistake because you essentially are leaving money on the table. An inspection also alerts you to any faults in the home such as mold, a bad roof, or other pricey issues you don’t want to deal with after the closing process.
2. You Spend Your Down Payment Money
Believe it or not, this is something that occurs quite often with home buyers. Nine times out of ten, a down payment is necessary if you want to close on your home. You will need to calculate the down payment money well before you sit at the closing table to save appropriately.
There are numerous ways to outsource your down payment money. However, some first-time home buyers mistakenly calculate that money into their total approval amount. For example, if you get a loan for $100K and 3% of that needs to be for a down payment, you should look for properties under 97K to have down payment money on hand.
You Don’t Read the Contract in Full Before the Closing Process
The #1 first-time home buyer mistake is failing to read the contract in full. Your contract will be looked over by your real estate and title agent however you, as the buyer, are ultimately responsible for accepting what is in that contract. You don’t want to be surprised by hidden fees or stipulations because you didn’t do a proper read-through on your closing contract. Buying a home is a tremendous investment— do your due diligence by making yourself aware of your entire agreement.
Have more questions? Contact Eques Title at one of our Ohio offices.