Posted August 13 2010, 5:59 AM PDT by Justin Waskow

5 Deal Breakers that can blindside home buyers

Posted in Uncategorized by Justin Waskow

dicePurchasing a home can be a complex endeavor for even the most well prepared home buyer.  You’ve diligently saved for your down payment, followed the market, researched agents and now you are ready to make an offer on your dream home.  Don’t let these 5 “Deal Breakers” come between you and your new home.


  1. Big Purchases on Credit. It is tempting to buy the furniture for your new home or a new car for the garage before the sale closes. Take care if you are making these purchases on credit. Large purchases on credit can have a major impact on your credit profile which effects your mortgage application. It’s a better plan to wait until after closing or pay cash for these transactions or you may be putting that furniture in a different living room than you originally picked them out for.

  2. Overpaying. Before your bank will approve your mortgage they will appraise the home you are purchasing.  If they feel you are overpaying they are likely to decline your mortgage application. If you find yourself in this situation consult with your agent on renegotiating your offer to be more in line with the bank’s appraised value.

  3. Purchasing too close to Foreclosure. If you are making an offer on a house which is facing foreclosure be sure to have a closing date set before the foreclosure date. Have your agent work with the lender to structure closing before the house goes back to the bank and into foreclosure.

  4. IRS liens. You’ve heard the old saying “Death and Taxes”.  Back taxes and liens can derail your attempts to get financing for a mortgage so be sure to have your books in order before filing your loan application.

  5. Comprehensive Loss Underwriting Exchange (CLUE). CLUE is a data base of insurance claims for both people and property.  Your home insurance rates are determined by the information about you and the property you plan to purchase which is contained in this report. Past claims for water damage, falling trees and even dog bites from present and past owners can multiply your insurance rates. Consult your agent about the CLUE report for your future home as soon as possible once your home purchase offer is accepted.


When purchasing a home there will be challenges which you can plan for and the unexpected hurdles.  By educating yourself as a consumer and choosing a well trained real estate agent you can avoid many of the pitfalls of 21st century home ownership.

 

What about you? Tell us if you have had any “deal breaker” experiences.


5 Comments

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  • The best advice I can give a first time home buyer is to gather as much information as possible before starting the process of buying your first home. This can include, in the state of Washington, a first time home buyers class sponsored by the Washington State Home Finance Commission. This usefull course will prepare them with infomation about mortgages and financing available to the first time home buyer through the Commision.

    Posted October 06 2010, 3:15 AM by Rick Chapman

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  • The correction has been made.

    Thank you for your insights on the last minute problems new buyers can face. As you point out all of these issues can be avoided with common sense, planning & research. Do you have any advice for first time homebuyers?

    Posted September 13 2010, 3:52 AM by Tara Sharp

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  • # 2 clarified: a buyer may choose to pay the difference between purchase price and appraisal price in cash if buyer chooses to do so, and can document the proper source of those funds for the lender requirements.

    Posted September 12 2010, 8:19 AM by Mike

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  • Blindside is one word.

    These 5 points don't seem like "blindside" last minute problems.

    # 1 is simple common sense.
    # 2 Overpaying? When the appraiser evaluates the property, that is an opinion. Perhaps a second opinion will have to be obtained, perhaps the seller will negotiate. But "overpaying" won't be an option for most buyers, since without an appraisal that supports the purchase price, the buyer won't be able to close the sale.
    # 3 Make certain you reced the preliminary title report and understand the duty of due diligence by both buyer and seller.
    # 4 When a buyer has IRS liens, they will show up during the lenders pre-approval phase, which should be before the buyer starts shopping for a home. When a seller has IRS liens, these should show up on a preliminary title report, which all buyers should be reading.
    # 5 All buyers using NWMLS forms have a contractual due diligence clause specifically for insurance and CLUE report.

    Posted September 12 2010, 8:18 AM by Mike

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  • Having your money in place - Have all money transferred into the one acct you plan on using for your deposit well in advanced of closing. Under the terms of new banking regulations all money needs to be sourced if moved around within the 2 months of asset statements required. For instance, your Grandparent in Boise gave you a large gift for $10k. The bank will need to see an official gift letter and copies of her bank statements showing that acct.

    Posted August 16 2010, 5:55 AM by Eric Campbell

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