Closing on a new home is an amazing financial and personal milestone. However, with such a big decision comes big responsibility. During this time, it’s important to plan out your next steps to set yourself up for success. Here are some of the most common roadblocks people encounter before closing on a new home – and how you can avoid them.
Shopping Without A Pre-Approval In Place
Many people think they should find a new home first and get their loan set up later. However, it’s going to be very difficult to shop without a potential home loan in place. This is because realtors look for pre-approval before taking potential buyers seriously. Most sellers are keen to find a buyer as quickly as possible – and they won’t wait around for you to get loan approval. Start by looking at multiple lenders to see who can offer you the best rates, and then choose the pre-approval that’s best for your needs. This will help to streamline the shopping process.
Making Other Large Purchases
Moving to a new home is an exciting step, and it can be tempting to buy a new car or new furniture to go with your new home. However, it’s best to hold off on the large purchases until you’ve closed on your new home. There are a few reasons for this – most importantly, you won’t want to do anything that alters your credit score until your new mortgage has been finalized. Your credit score is directly tied to your interest rates, so even a slight change to your credit score could push your interest rates up. Moving can also come with a number of hidden fees, so it’s best to save your money until you’re fully settled in your new home.
Moving to a new city can often come with career changes. However, it’s best to keep the same job from your pre-approval through to the closing process. Lenders will need proof of income to finalize a loan, so changing your job could put your loan in jeopardy. In fact, most lenders will expect proof of at least two years of steady income in order to finalize your loan.
Avoiding A Home Inspection
A home inspection is an extra moving expense, so many people are tempted to skip it. However, it’s worth spending the extra money to get a home inspected before you move in. As a homeowner, you’ll be responsible for making any necessary repairs on your new home, and you won’t want to be stuck with any surprises. Get a home inspection beforehand to make sure you have a clear idea of what to expect.
Opening A New Credit Card
Since moving can be expensive, it might be tempting to open a new line of credit. However, any changes to your credit score are going to show up as a red flag to your lender. Any kind of inquiry on your credit can raise alarm bells, so be very careful until your loan is confirmed.