Dumb reason No. 1: Waiting to line up financing
“You don’t truly know what you can afford until you meet with a lender,”
Dumb reason No. 2: Using a fly-by-night mortgage lender
The mortgage industry is rife with scams—including a slew of fake or unreliable lenders.
Dumb reason No. 3: Getting pre-qualified rather than pre-approved
Pre-qualification and pre-approval might sound similar, but they’re not. Essentially, anyone can get pre-qualified for a loan, because it only involves having a conversation with a lender about the state of your finances (no documents are exchanged). Getting pre-approved, meanwhile, involves the lender gathering all necessary documentation—your tax returns, bank statements, pay stubs, and more—packaging the loan, and submitting the file to an underwriter for review. If everything checks out, the lender will issue you a written commitment for financing up to a certain loan amount that’s good for up to 90 or 120 days
Dumb reason No. 4: Shopping outside your price range
Dumb reason No. 5: Making lowball offers in a seller’s market
You need to rely on your real estate agent to determine whether a house that you’re interested in has a fair listing price.
Dumb reason No. 6: Writing a bad personal letter to the seller
Don’t get into personal details” such as the fact that you’ve lost out on other homes or want to remodel the dated kitchen.
Dumb reason No. 7: Making a big purchase while in escrow
“Even buying a fridge can throw off your credit or debt-to-income ratio,” says Conway. Translation: Don’t make any big purchases until after you close on the house.
Dumb reason No. 8: Not budgeting for closing costs
If you don’t have enough cash to cover closing costs, you won’t make it to settlement; and if that’s the case, you could lose your earnest money deposit. Thus, make sure to get an estimate from your mortgage lender of what your closing costs will be before making an offer on a property (currently, this is legally required—just make sure to read it).