The time has finally come for you to buy your new home. You have saved up for years to prepare for the influx of cash reserves necessary to close on a new home. Your excitement level can only be described as that of a teenager who passes their driver’s license exam and gets their first new car. One major exception to the comparison; when you buy a car, you usually sign the paperwork and walk out with the car that day, usually hours after you sign the paperwork. A new home usually requires a minimum of 30-45 days. Think about your excitement level after buying your first car. You may have immediately gone to the auto shop, or retail store to buy things for your car. It’s only natural. Now let’s discuss the 30–45-day thing.
When you pre-qualify with your lender, it is for all intents and purposes, like a promise ring. A report card for your level of financial responsibility through the years. Think about that crazy class you had in High School. You worked so hard for 13 weeks to maintain a good grade and BAM! Your weighted final which counts for 40% of your grade comes back and kills your hard work dropping your grade. It doesn’t seem fair, does it? Buying a house is that exact same High School Class. Those 30-45 days are your weighted final, and it’s very easy to fail, especially when you make these very simple mistakes.
1. DO NOT buy or lease a new car while under contract. It’s amazing how many times this mistake has been made by potential home buyers. For those of you financially blessed enough to pay cash at every point and turn, this isn’t meant for you. You, by no fault of your own, are the straight A student who never has to study. We don’t hate you. Secretly, we all want to be you. For the C students (Picture me raising my hand) listen closely. Think Empire Strikes Back and carbonite freeze your wallet. You’ll thank me later
2. DO NOT switch jobs. Most lenders and banking institutions will require roughly 2 consecutive years of employment at the same location. Switching jobs may show instability, and from a banking perspective, that is not a good thing. So, if your boss is a jerk, suck it up, turn the other cheek and keep your nose clean. No one wants a simple confrontation to cause someone a chance at their dream home.
3. DO NOT miss bill payments. You need everything with your credit to stay perfectly intact during the due diligence period. As soon as a bill arrives by mail or email, pay it immediately. Don’t take a risk. If you are one that likes to wait on paying your bills, recommence after you close. Don’t tempt fate during the most important financial 30-45 days of your life. It’s just not worth it.
4. DO NOT move money around. Wait until you close on your new home to make any large transfers, deposits, or withdrawals. Your loan approval is based on your financial situation at the time of application. Any changes more than $500 will leave some head scratching. You may very well be required to submit a letter documenting the source. Remember, make things easy not hard. If you receive a monetary gift, consider waiting to deposit or ask for a letter from the giver stating you will not be paying it back. Make sure to speak with your lender before you make any monetary decisions. Protect yourself.
This process is like Swan Lake. It’s a ballet performance. It doesn’t matter if you like ballet, you better damn well like it for the next 30-45 days or when you decide to stand on your toes you might come down with some broken phalanges. I once did that playing tennis. It hurts, trust me.
The opinions shared and/or suggested are my own, and not necessarily shared by my brokerage. Contact me today for a brief consultation to see if the time to buy/sell is right for you.