The first-time homebuyer steps are a long one, and if you’re not careful, there’s a lot that can throw you off-track. From low appraisals to surprise credit checks, a number of problems could slow your purchase or even undermine it altogether. Are you on the search for a new home? Want to make sure your purchase goes off without an issue? Then take steps to avoid these all-too-common first-time homebuyer mistakes:
Home insurance
Your lender is going to require an satisfactory home insurance policy before they’ll close on your loan. If you don’t remember to secure one or your policy start date doesn’t align with your closing, it could throw things off schedule.
There also may be cases when a home isn’t insurable. This might happen if the previous homeowner made an insurance claim for some sort of high-risk condition — like mold or severe water damage.
Low appraisals
Not a lot of first-time homebuyers have a great understanding of appraisals. To put it layman terms, if your appraisal comes in lower than your offer, it could send things back to square one. You’ll either need to pay the difference, renegotiate with the seller or back out of the deal entirely. Your lender won’t cover more than the appraised value.
To prevent this, always do your research before submitting an offer. Look at corresponding sales in the area and ask your agent to help you determine an appropriate bid that aligns with those numbers.
Credit problems
Many lenders will re-check your credit just before closing on your loan. This can be an issue if you’ve made any big purchases in the last while or if you’ve applied for other loans or credit cards in that time.
Fortunately, this is an easy one to avoid. Just keep a tight rein on your spending in the weeks leading up to your home purchase, and save the bigger buys like furniture and new cars until after you’ve closed on your loan.
Problematic walkthroughs
Before you close on your loan, you’ll have the chance to walk through the house one last time, making sure any request you made were done and that the owners cleared out their property and left the place in satisfactory condition.
If that’s not the case, you’ll have to work with your agent to resolve the problem. They may need to ask for closing cost credits to help you cover any additional repairs, cleaning or trash removal services that might be necessary due to the seller’s negligence.