As you already know or are about to realize, real estate transactions are extremely complicated. It’s not as simple as finding the perfect home online, putting some money down, and moving in. There are several steps and multiple parties involved. Before you start your search, we highly recommend you find an advisor or group of advisors that can help you with every aspect of your home purchase.
Once you’ve found your home, the last thing you want is the endless frustration that can come when your pending purchase gets derailed. It’s hard to start dreaming about life in your new home only to have that shattered by one of the common things that can stop a deal from happening. Here are 5 things that could potentially derail you getting your home, and how to avoid them.
Your Mortgage is Denied
The very first thing you should do once you are ready to start shopping is to obtain a mortgage pre-approval letter. This will help you understand how much home you can comfortably afford, plus almost all buyers will want to see proof of your pre-approval before entertaining your offer.
Denied? Just because you have a pre-approval, that does not mean that you will absolutely get final approval for the loan type and amount you need. One of the biggest mistakes we see potential homebuyers make is allowing something drastic to happen which affect their credit or situation. Here is a very straightforward and entertaining reminder for you as you go into your process.
If you intend on acquiring a mortgage loan to purchase your home (a vast majority do) then the home’s value must first be appraised by a licensed appraiser.
If the home is appraised for less than the value of the loan you are trying to get, this will likely be a major issue in the sale process. If you want to avoid this, make sure you are working with a reputable real estate agent so you know what the home’s actual value is compared to other homes, not just what the seller is asking for it.
The Home Inspection
This can be a major sticking point before going to the closing table.
The home inspection is an important way to fully understand and document the condition of the home. This is your opportunity to negotiate with the seller over any big repairs that may need to be made. The best way to avoid any disputes over the home inspection is to have one done yourself before you list the home. That way you will know where you stand and won’t be taken by surprise when the buyer has their inspection done.
You Might Back Out Last-Minute
It happens. You may realize you are over-extending your financial comfort zone, a better home comes onto the market, or something out of your control might drastically change your decision. It’s ok. As long as you are working with experienced advisors, this should not be too much of an issue. Deals do fall through, and you definitely do not want to make a huge financial commitment just because you didn’t feel comfortable backing out.
Insurance Might be an Issue
You will need proof of insurance at the closing table. This seems strange, but yes, you will need to speak with an insurance agent and get a policy ready before you purchase a home.
There has been a lot of shakeup in the market lately, and underwriting guidelines have really tightened up in Florida. Make sure you speak with your insurance agent and realtor to make sure your home is insurable and that there are no major issues that could prevent you from closing.
When it comes to home buying, an advisor team with knowledge and having what may feel like over-preparation are going to be keys to your success. The more you know about the home buying process, the better you can be prepared for situations like the ones we described above.
If you’re getting ready to start shopping, allow us to help you with the pre-approval and mortgage locks which we mentioned above. We are here to guide you every step of the way and can connect you with other advisors – like a Realtor that can help with the different aspects of the process.
We hope to speak with you soon!