Closing on a Comox Home? Avoid Doing These 4 Things
You may breathe a sigh of relief once your offer to purchase a home has been accepted, but you’re not quite done yet. There are still a lot of things to do between the time you come to terms with the sellers and the moment you finally put your key in the front door.
You still have to navigate the closing process; costs are associated with this next step. There are multiple steps involved in the transfer of a home from seller to buyer. Closing times between the time you have an accepted offer and when you move in can vary from a couple of weeks to a few months. This includes time for processing the deposit, conducting a title search, getting a home inspection organized, finalizing the purchase agreement, the lender’s property appraisal, and getting final mortgage approval.
Buyers should budget about 3% of the purchase price towards closing costs, over and above the deposit.
What a lot of people don’t understand is that lenders don’t only evaluate the buyer’s ability to make the mortgage payments. They also look at their ability to pay for all other credit obligations, such as student loans, cars, and lines of credit. And they evaluate the property to make sure their investment is protected and that the value is there.
Below are four things you should not do during the closing process:
Go on a shopping spree
We get it; it’s exciting to start imagining yourself in your new home, and many buyers want to rush out and buy new furniture. Those buy-now-pay-later programs are calculated into the debt servicing ratios. If the lender revisits the buyer’s credit report before completion, which they very often do, and it has changed at all, they actually have the right to withhold financing. It’s important for buyers to maintain the same credit position as at the time of the financing application with their lender.
The same goes for buying a new vehicle. You might be purchasing a home farther from work, but now is not the time to add a car loan to your list of debts. It’s different when you have a car payment before applying for a mortgage—the lender has already taken that into account. But after you’ve been approved for a mortgage, a new car payment will change your credit position. This could cause consequences. You could be scrambling for a different lender at the time of completion, which is stressful for both sellers and buyers. In fact, any new big-ticket item purchases can raise red flags and delay your financing approval—or even ruin it.
Quitting your job
Sure, it would be great to have a higher salary now that you’ll be tackling monthly mortgage payments, property taxes, and home insurance. However, wait until the closing process is finalized before you blitz the internet job boards with your resume. Taking a higher-paying job between getting an unconditional accepted offer and completing on the deal could cause issues with the lender. Some of these new jobs, even though the buyer thinks they’re in a better position, come with a probation period. If it’s a temporary or casual position, that could cause a problem.
Start booking renovation projects
It’s so tempting to make plans for opening up all the walls in your new home. You may want to rip up the old carpet or gut the kitchen. Although wait times to book contractors can be long, don’t get ahead of yourself. Putting down deposits and signing remodeling contracts is a bad idea until you officially own the home. It’s a good idea to live in the house for 12 months, or some period of time, before doing renovations. This way you can get to know the property and figure out where it’s best to spend your dollars. Of course, if the home you’re buying needs a massive overhaul before it’s even livable, you can get started as soon as all the final paperwork is signed and completed.
Getting overwhelmed
Being patient makes sense during the closing process. Your REALTOR will be able to help guide you through it. There are many moving parts to the closing process, and getting overwhelmed can ultimately make it an unenjoyable experience for you. It can become complicated and stressful. It’s important to slow down, take the proper steps, and have a successful completion. Your REALTOR is there to help along the way.
Reach out to me to learn more!
