Real Estate Tips May 7, 2024

Mistakes to Avoid After Going Under Contract on a Home

Buying a home is an exciting but complex process, and the work doesn’t end once you’ve gone under contract. There are several common mistakes new home buyers often make after this critical milestone that can derail the closing or lead to issues down the line. Here are some key pitfalls to watch out for.

1. Being Careless with Credit
It’s crucial to avoid taking on any new debt or making major purchases during the home buying process, as this can impact your credit and jeopardize your final loan approval. Lenders will re-check your credit right before closing, so maintain your credit profile by paying all bills on time and refraining from opening new accounts.

This means no new credit cards, auto loans, or other financing. Even small purchases like furniture or appliances on credit can raise red flags with your lender. It’s best to hold off on any major financial decisions until after you’ve closed on your new home.

In addition, be cautious about making large cash withdrawals from your accounts. Lenders want to see a consistent savings pattern, so sudden dips in your balances could raise questions. If you do need to make a large cash transaction, be prepared to provide documentation to explain it.

2. Draining Your Savings
While the down payment and closing costs are significant upfront expenses, it’s important not to completely deplete your savings. Maintaining an emergency fund and financial cushion is key to avoiding stress and instability as a new homeowner.

Unexpected home repairs, moving costs, and other move-in expenses can quickly add up. If you’ve used all your available cash to close on the home, you may find yourself in a precarious position if something goes wrong. Aim to keep at least 3-6 months’ worth of living expenses in your savings account, even after your home purchase.

It’s also wise to have some extra funds set aside for decorating, furnishing, and making the home your own. Buying a house is just the first step – you’ll likely want to invest in new paint, window treatments, landscaping, and other upgrades to truly make the space feel like yours.

3. Ignoring Association Rules and Regulations
If you’re buying a condo or home with a homeowners association, be sure to thoroughly review the association’s rules, regulations, and meeting minutes before closing. Failing to understand restrictions on things like exterior modifications or window treatments can lead to costly surprises down the line.

Associations often have strict guidelines around the types of changes you can make to the property, as well as rules about parking, pets, and noise. Violating these rules can result in fines or other penalties, so it’s important to get familiar with them upfront.

Additionally, review the association’s financial health and any planned special assessments. If the HOA is poorly managed or has major projects on the horizon, that could impact your costs as a new homeowner. Taking the time to understand these details can help you avoid unpleasant and expensive headaches.

4. Neglecting Home Maintenance
Many first-time buyers underestimate the ongoing maintenance required for a home. From cleaning the dryer vent to addressing any water issues in the basement, staying on top of home upkeep is crucial to avoid bigger problems. Establishing a relationship with a reliable handyman can make this process much easier.

It’s a good idea to create a home maintenance checklist and calendar to keep track of seasonal tasks like gutter cleaning, HVAC servicing, and checking for leaks or damage. Failing to properly maintain your home can lead to costly repairs down the line, so don’t let these important chores fall by the wayside.

You should also familiarize yourself with the location of important home systems like the circuit breaker, water main shutoff, and gas line. Knowing where to find and how to operate these can save you a lot of stress if an emergency arises.

Preparing for a Smooth Transition
By being mindful of these common pitfalls, new home buyers can help ensure a smooth transition into homeownership and set themselves up for long-term success. With careful planning and preparation, the excitement of buying a home can continue well past closing day.

The home buying process doesn’t end when you sign on the dotted line. Maintaining your credit, preserving your savings, understanding association rules, and staying on top of home maintenance are all crucial steps to take after going under contract. By avoiding these common mistakes, you can focus on the fun part – making your new house a home.