Buying a home can be a long process. From gathering paperwork to praying for pre-approvals and finally hunting for a house, there are several places that can cause hiccups. The best way to avoid these hiccups is to know exactly what to look for and do your due diligence throughout the entire process. Here are a few common hitches to watch out for.
Changes in Income and Debt
When you start the home loan process, you have to provide income verification and a snapshot of your debts. This is so that a lender can assess your financial landscape and determine how much home you’ll be able to afford. While there are some things you can’t plan for, like a loss of job or unexpected medical expense, it’s best to try to keep your finances stagnant through the buying process. In general, try not to rack up any new credit card debt or change jobs until after you close on your home. This will prevent you from having to re-verify your income and debt-to-income ratio.
Errors in Paperwork
The mortgage industry is a human driven industry. Where there are people, you have to calculate for human error. Whether it’s a misspelling of a name or an incorrect number, a lot can go wrong when submitting the documents you need to buy a home. The best way to prevent these mistakes is to double and triple check your documents as you upload them. Doing your due diligence on the front end can prevent later hiccups when it’s time to start closing.
Problems with the Inspection
We always recommend an inspection on any home purchase. It’s an added cost up-front, but it can save you thousands later on if you find glaring issues after you move into your home. Inspections are one of the most important steps in the home loan process, but they can also cause some of the biggest hurdles. If your home inspection reveals the need for major repairs, you could end up having to move back closing day. If you find that your home needs repairs, you can negotiate with the seller to get them to pay for it before you close, or you can request a decrease in the sales price to allow you to budget for repairs. An inspection can reveal issues in the home that can cause delays, but it’s an important step in insuring your new home is livable.
Appraisal is Too Low
Appraisals are an important (and required) step in the mortgage process because it evaluates the value of the home you’re purchasing with how much you’re financing. In most cases, the amount you’re financing must be equal to or lower than the value of the home. Because of this rule, you might end up with delays in closing if your home is appraised at a lower price than what you’ve financed. If this happens, you might have to get re-approved for the new loan amount. You may also be able to negotiate the price with the seller or pay more out of pocket to balance the value. Appraisals are your lender’s way of insuring that they’re financing a home for what it’s worth, so it’s a crucial step in ensuring success for all parties.
Buying a home is an exciting – but sometimes stressful – process. Doing your due diligence early and making sure you follow all the proper steps will help you avoid these hiccups and close on time. To get the best out of your homebuying process, contact an experienced lender at Flat Branch Home Loans today!
