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Chandler Housing Market Tough on Buyers

Posted by on Mar 17, 2020 in Buying a Home, Local Experts, Real Estate, Selling a Home, Uncategorized | 0 comments

Chandler housing market worsens for buyers

By PAUL MARYNIAK, Arizonan Executive Editor

As Chandler and the rest of the East Valley stand at the beginning of the spring home-buying season, the inventory of available houses is continuing to dwindle at a staggering rate, according to the website that closely analyzes the metro Phoenix housing market.

“Although there a few exceptions, the collapse in available supply in most ZIP codes is nothing short of staggering,” the Cromford Report said last week.

Indeed, three Chandler ZIP codes are among 25 in the Valley that have lost two-thirds of their normal housing inventory in the last 12 months, the report said.

Inventory of available homes in Chandler 85224 had plummeted 73 percent while the decline in active listings in Chandler ZIPs 85225 and 85286 was 73 percent and 67 percent, respectively. Some of Chandler’s neighbors aren’t doing any better, it added, citing Tempe 85282 and 85283, where inventory was down 70 percent from a year ago.

“The current situation is even more remarkable than last month,” the Cromford Report said last month, reporting that active listings in February totaled less than 12,000 homes – down 35.1 percent from February 2019 and down 1.4 percent from January 2020.

Cromford said its analysis of available housing on the market shows the inventory shortage is particularly severe Chandler – where the lack of inventory has made it

“The lack of supply was described as shocking at the start of 2020, so I am starting to run out of adjectives to adequately describe the current state of supply. It is almost (but not quite) unheard of to see supply drop between January 1 and February 1,” it added.

In virtually every city in the Valley, the website said, the market continued to increase its favorability toward sellers – at buyers’ expense.

Moreover, demand is increasing – a harbinger of even worse news for homebuyers in the coming months, Cromford said.

“Trying to buy when supply is so low can be a frustrating affair,” it said.

“This is a truly extraordinary state of affairs reflecting above average demand meeting severely restricted supply,” it said, adding:

“Economics 101 teaches us that lower supply and higher demand is a recipe for higher prices. So far, the reaction of pricing has been muted. However, you should not expect it to stay that way.

“The spring selling season has just started and by the time we get to June a significant upward adjustment in pricing is likely.”

Supply of homes between $100,000 and $225,000 has fallen disastrously, according to Cromford’s data, which show declines of well over 40 percent from a year ago.

To illustrate the inventory crisis, Cromford picked Chandler, where there are only about 200 active listings.

“The average for Chandler over the last 20 years is 1,019,” it said, calling it a record low.

It also forecast a worsening situation for buyers, noting:

“Mortgages are becoming easier to qualify for in many different ways, so demand is likely to increase. Yet there is no sign of more supply coming along to satisfy it. In this situation the market is likely to become both frenzied and frustrating.”

One of the ways the website uses to illustrate supply and demand is an index based on trends in pending, active and sold listings compared with historical data over the previous four years.

Values below 100 indicate a buyer’s market, while those are favorable to sellers.

Avondale topped that list with a seller-friendly reading at 421, followed, in order, by Chandler (358), Gilbert (350), Glendale (300) and Mesa (287) to round up the five Valley markets where buyers can expect little inventory – and even less room to haggle over price.

“Once again we have 16 out of 17 cities still improving for sellers, despite the extreme advantage that sellers have enjoyed for many months,” Cromford said of its latest market index readings.

“Scottsdale is the only exception and even here the move in favor of buyers is very modest,” it added.

“Selling a home around $200,000 to $300,000 is easier than falling off a log,” it said. “Successfully buying a home at this price is a major challenge.”

The Cromford Report’s data for the West Valley show buyers are paying a premium to snap homes off the market in relatively short periods of time.

For example, in Chandler ZIP code 85248, 198 homes sold in the last 90 days for an average price of $441,480, according to Cromford’s data. The average time those homes were on the market was 61 days.

In 85248, the story was almost identical. In the last 90 days, 221 homes were sold for an average price of $452,057 and their average time on the market also was two months.

In 85286, the average sale price was $447,621 for the 173 homes that were sold in the last 90 days. Their average time on the market: 56 days.

Chandler housing market worsens for buyers

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6 Things That Turn Home Buyers Off

Posted by on Dec 2, 2019 in Buying a Home, Local Experts, Real Estate, Selling a Home, Uncategorized | 0 comments

…and What Sellers Can Do To Prevent It!

We’ve talked about surprising home features buyers LOVE, and about why buyers aren’t biting on today’s market, despite it being highly affordable.  But we haven’t talked much about the characteristics of sellers, listings and homes that turn buyers all the way off.  Well, not until now!

Here are 6 big-time homebuyer turn-offs that make buyers cringe at the thought of your home, and action steps you can take to prevent your home from being an offender:

  1. Stalker-ish sellers. I know you think you’re being helpful, walking the buyer through your home and pointing out the wagon-wheel light fixture you made with your own two hands, the custom mural of a stingray you paid top dollar to have painted across your living room wall and the way the sounds of happy schoolchildren running across the front yard of your corner lot to get to the school in the next block lifts your spirits.  However, the buyers might be trying really hard to ignore, minimize or figure out how to undo the very features of your home you hold dear.  They also may want or need to have personal space and conversations with their mate or their agent while they’re viewing your home – you being there, especially walking right alongside them while they’re in your home, prevents them from being comfortable about doing this, or discussing all the things they would change if the home were theirs. In my experience, the more nitpicky a buyer gets about a house and the more detailed their list of things they would change, the more serious they are about considering making an offer on this place.What’s a Seller to do? Back off. Let your home be shown vacant, or leave the house when people come to see it.  If you need to be there, at least walk outside or go sit at the coffee shop down the way while prospective buyers view your home.  If the buyers have questions, their people will contact your people.
  2. Shabby, dirty, crowded and/or smelly houses.  You already know this one. Yet, buyers constantly marvel. The buyers who come to see your home are making the decision whether to choose your home for the biggest purchase they’ve ever made during the worst economic conditions most of them have ever experienced.  Your job is to get your home noticed – favorably – above the sea of other homes on the market, many of which are priced very, very low.What’s a Seller to do?  Other than listing your home at a competitive price, the only tool within your control for differentiating your home from all the foreclosures and short sales is to show it in tip-top shape. Pre-pack your place up, getting rid of as many of your personal effects as possible. Do not show it without it being completely cleaned up: no laundry or dishes piled up, countertops freshly washed, smelly dogs (I have a couple who smell on occasion – no judgment – but don’t show your house with pet odors) or litter boxes cleaned and/or out of the house.
  3. Irrational seller expectations (i.e., overpricing). Buying a house on today’s market is hard work!  On top of all the research and analysis about the market and situating their own lives to be sure they’ll be able to afford the place for 5, 7, 10 years – or longer, buyers have to work overtime to separate the real estate wheat from the chaff, get educated about short sales and foreclosures and often put in many, many offers before they get even a single one accepted.  The last thing they want to add to their task lists is trying to argue a seller out of unreasonable expectations or pricing.  And, in fact, there are so many other homes on the market, buyers don’t have to do this.  When they see a home whose seller is clearly clueless about their home’s value and has priced it sky-high, most often they won’t bother even looking at it.  If they love it, they’ll wait for it to sit on the market for awhile, hoping the market will “educate you” into desperation, priming the pump for a later, lowball offer.What’s a Seller to do? Get real. Get out there and look at the other properties that are for sale in your area and price range. Get multiple agents’ take on what your home should be listed at, and don’t take it personally if their recommendation is low. If your home has much less curb appeal or space or is much less upgraded than the house across the way, don’t list it at the same price and expect it to sell. If you owe more than your home is realistically worth, you may need to reexamine whether you really want or need to sell, or consider a short sale, if you simply have to sell.  Don’t be tempted into testing your market with an obviously too-high price, unless you’re prepared to have your home lag on the market and get lowball offers.
  4. Feeling misled. Here’s the deal.  You will never trick someone into buying your home. If the listing pics are photo-edited within an inch of their lives, or your home is described as an “approved” short sale when, in fact, the bank approved another offer, now withdrawn, but will require a new offer to go through any sort of approval process (even a truncated one), buyers will learn this information at some point.  If your neighborhood is described as funky and vibrant, as code for the fact that your house is under the train tracks and you live in between a wrecking yard and a biker bar, prospects will figure this out.  If the detailed information about your home, neighborhood or even transactional position (e.g., short sale status, seller financing, etc.) is misrepresented, the sheer misrepresentation will turn otherwise interested buyers off.  If you authorize your agent to “verbally approve” the buyer’s offer, don’t go back the next day demanding an extra $5,000. In cases where the buyer feels misled, whether or not that was your intention, running through the buyer’s mind is this question: If they can’t trust you to be honest about this, how can they trust you to be honest about everything else?What’s a Seller to do? Buyers rely on sellers to be upfront and honest – so be both.  If your home has features or aspects that are often perceived negatively, your home’s listing probably shouldn’t lead with them (like the ad I recently saw with the intro line: “this place is a mess!”), but neither should you go out of your way to slant or skew or spin the facts which will be obvious to anyone who visits your home.  Make sure you know what the listing of your home reads like, before it’s published to the web, and that a prospective buyer will not feel misled by it.
  5. New, ugly home improvements.  Many a buyer has walked into a house that has clearly been remodeled and upgraded in anticipation of the sale, only to have their heart sink with the further realization that the brand-spanking-new kitchen features a countertop made, not of Carerra marble, but brand-new, pink tiles with a kitty cat in the middle of each one (I saw this once, people – no joke).  Or the pristine, just-installed floors feature carpet in a creamy shade of blue – the buyer’s least favorite color.  New home improvements that run totally counter to a buyer’s aesthetics are a big turn-off, because in today’s era of Conspicuous Frugality, buyers just can’t cotton to ripping out expensive, brand new, perfectly functioning things just on the basis of style – especially since they’ll feel like they paid for these things in the price of the home.What’s a Seller to do? Check in with a local broker or agent before you make a big investment in a pre-sale remodel.  They can give you a reality check about the likely return on your investment, and help you prioritize about which projects to do (or not).  Instead of spending $40,000 on a new, less-than-attractive kitchen, they might encourage you to update appliances, have the cabinets painted and spend a few grand on your curb appeal.  Many times, they will also help you do the work of selecting neutral finishes that will work for the largest possible range of buyer tastes.
  6. CRAZY listing photos (or no photos at all).  Online, we’ve seen listing photos that have dumpsters parked in front of the house, piles of laundry all over the “hardwood” floors touted in the listing description, and once, even the family dog doing his or her business in the lovely green front yard.  Listing pictures that have put your home in anything but its best, accurate light are a very quick way to ensure that you turn off a huge number of buyers from even coming to see your house!   The only bigger buyer turn-off than these bizarre listing pics are listings that have no photos at all; most buyers on today’s market see a listing with no pictures and click right on past it, without giving the place a second glance.

What’s a Seller to do?  Check your home’s listing online to make sure that the pics represent your home well.  If not, ask your agent to grab some new shots and get them online.

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What Affects Mortgage Rates?

Posted by on Nov 2, 2019 in Buying a Home, Local Experts, Mortgage Info, Real Estate, Uncategorized | 0 comments

Your mortgage rate depends on your own financial portfolio and the home you plan to buy. But that’s not all. Mortgage rates also reflect movements in the U.S. housing market and the global economy — which is why they’re in constant flux.

  • Economy – The global financial picture drives all interest rates, including mortgage rates
  • Lender pipeline – The amount of business a lender is currently processing can impact their rates
  • Property location – State laws can drive up lender costs or keep them down
  • Home use – Primary residence, vacation home, or rental?
  • Property type – Single-family, multi-family, condo, mobile, co-op, etc.
  • Loan-to-value – Borrowing less (and putting more down) gets you a better rate
  • Credit score – Better credit means a lower interest rate
  • Loan features – Term, documentation, rate adjustment, interest-only payments, etc.
  • Points – Paying more up front for “discount points” lowers your rate
  • Loan amount – Very high or very low loan amounts can mean higher rates

The lowest advertised mortgage rate will probably apply to you if you have a low loan-to-value ratio and great credit. Everyone else will be subject to risk-based pricing adjustments.

You’ll only know what your rate is by getting a custom mortgage quote from a lender based on your unique borrower profile. And, typically better personal service from a local mortgage broker that will give you personal service with local interest in the community – they have more to lose if they do a bad job!!!

Taking control of mortgage rate factors

You can’t control many of the things that impact your mortgage rate. (Unless, maybe, you’re the president of the Federal Reserve or POTUS.)

The good news is that the variables you can control have the most impact on your rate. They are:

  • Property type — If deciding between two homes, incorporate the relative cost of financing when comparing them
  • Loan-to-value (LTV) — Putting more money down improves your chances of loan approval, cuts your loan fees and gets you a lower mortgage insurance rate (if applicable)
  • Credit score — It may be worth it to put off buying a home and concentrate on raising your FICO score for a lower rate
  • Loan features — Choosing a loan with a shorter fixed-rate period, or one with a 15-year amortization instead of a 30-year term can save you a lot in interest
  • Points — You can buy a lower interest rate by paying more up front, if you have expendable cash on hand
  • Loan amount — It might be smarter to get a conforming first mortgage with a purchase-money second mortgage than taking out a more-expensive jumbo home loan

By understanding the factors you can and can’t control, you can get your best mortgage rate when you buy or refinance a home.

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HUD FHA Condo Financing

Posted by on Aug 14, 2019 in Local Experts, Mortgage Info, Real Estate, Retirement, Selling a Home, Uncategorized | 0 comments

HUD Announces New FHA Condo Financing Rules!

The U.S. Department of Housing and Urban Development is expected to release updated guidance tomorrow on FHA-insured condominium financing. The new rules should benefit your real estate clients and customers by allowing more buyers to obtain low down-payment mortgages on affordable housing options.

Specifically, the new rules will:

  • Extend FHA certifications on condo developments from two years to three years, reducing the compliance burden on condo boards.
  • Allow for single-unit mortgage approvals—often known as spot approvals—which will enable FHA insurance of individual condo units, even if the property does not have FHA approval.
  • Secure additional flexibility in the ratio of investors to owner-occupants allowed for FHA financing in a condo building.

The full guidance will go into effect in mid-October, 60 days from publication.

“Condominiums are often the most affordable option for first time home buyers, small families, and those in urban areas,” said NAR President John Smaby, in a statement issued to the media Wednesday morning. “We are thrilled that (HUD) Secretary (Ben) Carson has taken this much-needed step to put the American dream within reach for thousands of additional families.”

Since 2008, NAR has championed policy changes in condo lending. NAR has sought rules that would allow the owner-occupancy level to be determined on a case-by-case basis and that would extend the approval period for project certification to five years.

NAR’s existing-home sales report for June showed condominium and co-op sales at a seasonally adjusted annual rate of 580,000 units, a decline of 3.3% from May and 6.5% from June 2018. With more than 8.7 million condo units nationwide, only 17,792 FHA condo loans have been originated in the past year.

“This ruling, which culminates years of collaboration between HUD and NAR, will help reverse recent declines in condo sales and ensure the FHA is fulfilling its primary mission to the American people,” Smaby said.

The full rule for single-family condo financing is scheduled to be published in the Federal Register on Aug. 15, 2019, and available online at https://federalregister.gov/d/2019-17213, and on govinfo.gov.

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Updates & Upgrades Value to Sale

Posted by on Jul 9, 2019 in Buying a Home, Local Experts, Real Estate, Selling a Home | 0 comments

Why Expensive Renovations May Not Boost Your Sale

Though home improvement adds value to a property, your sellers don’t always have to undertake big projects to win a higher price at resale.

June 26, 2019  |   by Danielle Braff

As modest increases in inventory begin to attract more buyers to the market, it may seem wise for your sellers to undertake renovation projects to boost their competitive edge. Kitchen and bathroom upgrades, for example, are among buyers’ most desired features and can fetch a handsome return on investment, according to the National Association of Home Builders. But even as remodeling demand rises—the NAHB predicts home improvement activity will jump 1.6% and 1.1% in 2019 and 2020, respectively—some real estate professionals aren’t sold on the idea that renovating always fast-tracks a home sale.

There are two types of homes that sell quickly in today’s market: fixer-uppers and completely renovated properties, says Blayne Pacelli, a sales associate with Rodeo Realty in Studio City, Calif. You’ll need to pay attention to local market dynamics to determine the salability of each type of home in your area. For example, if your market has an abundance of investors, who typically renovate anyway for flips or rental properties, your sellers may not need to upgrade their homes in order to sell. Traditional buyers, however, may want a move-in–ready property.

NAR’s 2019 Remodeling Impact Report

Homeowners and renters remodel, redesign, and restructure their home for a variety of reasons. This report takes a deep dive into the differences between remodeling when hiring a professional compared to individuals who “do it yourself.”  Get the report here –  DIY Remodeling Report NAR 2019

In the Los Angeles neighborhood where Pacelli works, investors and traditional buyers are both aplenty. His renovation advice to clients depends on each one’s situation. “If a house is already fixed up except, say, one bathroom, I would suggest updating that bathroom to [appeal to a wide market],” he says. “If the bathrooms and kitchen need updating, I would leave them as is” and market the home to investors.

Weighing Your Options

There’s no doubt that home improvement increases property values, but renovating can be expensive—and there’s no guarantee your clients will recoup all of the costs at resale. With that in mind, you must help your clients decide: Is the expense of remodeling worth it? Small improvements rather than large-scale projects may suffice. “Timing matters as does the cost to renovate,” says Elisa Uribe, a sales associate with Golden Gate Sotheby’s International Realty in Oakland, Calif. “It is a seller’s market in our area. In some cases, minor changes such as interior and exterior painting and updating the landscaping can add a lot of curb appeal and make the house more appealing to a buyer.”

Uribe has also used virtual staging to present renovation options to buyers, relieving her seller of having to do the work. In March, she sold a client’s unrenovated three-bedroom, one-bathroom home, built in 1910, at the list price of $564,000. The sale occurred even though the seller had not updated the property’s exterior siding, windows, landscaping, and hardwood floor finishes.

The buyer was attracted to Uribe’s virtual staging of the home, which showed what it would look like with the updates and new furniture. Uribe also virtually staged the home’s layout with an additional bathroom to show buyers the renovation possibilities. “My client was out of state and didn’t have the time, or the funds, to update the house himself,” Uribe says. “The buyer was an investor who planned to update the property and put it back on the market fully renovated.”

Less Is More

Sometimes, some form of home improvement is necessary to elevate the profile of an otherwise undesirable property. In these cases, it may be best to choose simple projects with big impact, such as refreshing the paint or hardwood finish. James McGrath, co-founder of Yoreevo LLC in New York, says one of his buyers recently closed on a condo that had been extensively renovated. The seller, an interior designer, saved money by designing the remodeling projects herself, but she still spent $100,000 on the actual work, which included gutting the kitchen and bathroom among other changes, McGrath says. “If it’s not the highest price per square foot in the building’s history, it’ll be pretty close,” he says of the deal.

The renovated unit received a lot of foot traffic, with 60 to 70 showings. “That being said, the owner won’t make money on the renovation,” McGrath says. Though the renovation generated a higher price for the condo—which McGrath’s client bought for $690,000— it wasn’t enough to cover the seller’s remodeling costs, he adds. This is an example of why McGrath suggests that homeowners avoid big projects prior to selling.

Another renovation con: While the improvements may be a hit with some buyers, others may have different preferences and won’t pay a higher price for the work that was done. In fact, McGrath’s buyer brought in his own contractor because he wanted to replace the tile in the kitchen and backroom. Though the tiles were new and in pristine condition, the buyer had a different vision for the space, McGrath says. “Presumably, the seller would have gotten the same offer from [my buyer] had she not spent thousands of dollars on those tiles.”

Protect Clients’ Bottom Lines

You can help keep your sellers on budget by reminding them that “restoring the home to a good state of repair” is all that’s necessary before listing, says Michael Edlen, SFR, a sales associate at Coldwell Banker Pacific Palisades in Pacific Palisades, Calif. But that may mean something different in each market. In areas where buyers have the advantage, a seller may need to do more work on his or her home. “If an owner does not perform basic repairs, many buyers tend to ‘horribilize’ what they think they see and how much it could cost to fix it.”

If your client’s home needs an overall update, focus on the smallest items that have the biggest impact first and test it on the market before deciding to invest in larger projects. Updated light fixtures and window treatments, which are eye-catching accents, are often enough to move buyers, says Dawn Levy, a sales associate with Berkshire Hathaway HomeServices Georgia Properties in Atlanta. If your clients want to take it a step further, they can install new energy efficient windows, which can be costly but is a huge selling point with buyers, Levy adds. “A home with good bones that needs a cosmetic facelift is much more appealing to buyers,” she says. “Price point also plays a role here.”

Of course, the value of any renovation depends on your market. What works in one area may not work in another, so you must be knowledgeable about your specific neighborhood. In New York, for example, condos and townhomes that aren’t completely renovated typically don’t get much attention from buyers, says Eric Rosen, a broker with Halstead Manhattan LLC. “If the apartment or townhouse requires work, then the seller would be penalized,” he says. “This means that the property will trade for less than the repairs would have netted in a sale.”

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14 Things to Avoid Before Buying a House

Posted by on Jun 13, 2019 in Buying a Home, Local Experts, Mortgage Info, Real Estate | 0 comments

14 Things to Avoid Before Buying a House

Many first-time home buyers are surprised to discover just how many ways you can mess up a home purchase. You may have got your pre-approval, found a home you loved and made an offer. But if you want to avoid messing up the transaction, you will need to be extremely careful until the sale has closed.

Keep reading as I tackle what not to do before buying a house. Many of these items are mortgage mistakes that can be easily avoided. If you have an exceptional mortgage broker or real estate agent, more than likely a few of these points have already been mentioned.

Use the following tips to protect yourself and your home purchase. In fact, be sure to check out what you should do before buying a home. These twenty tips will help you make the best buying decision possible.

Making mistakes is easy when you have never bought a home before. Avoid these home buying mistakes to keep the stress out of your life!

  1. Don’t miss loan payments.

You must keep your payments current on all your loan accounts, including credit cards and car loans. The lender will look at your credit again before finalizing your mortgage, and if you have missed any payments, it may lead to you losing the loan.

Many buyers mistakenly believe that once the lender issues their loan commitment, they are golden. This is NOT the case!  Lenders have the power to revoke a mortgage commitment and will do so if they see fit. Not too long ago a buyer was purchasing a home I listed in Millbury Mass. The buyer had been selling and buying a house simultaneously. They closed on their existing home but didn’t make their last mortgage payment.

Unfortunately, this was flagged on their credit report and prevented the buyer from getting the loan for their new purchase.

They had to apply at a new bank under a different program (FHA instead of conventional). Needless to say, this caused their purchase to be delayed, and in the process, they lost thousands of dollars.

  1. Be careful before you consolidate your debt.

Debt consolidation can be tempting when you finally start looking at buying a home. Most consolidation offers make it possible for you to bring all your debt under one umbrella payment, which makes sense for some people.

But there are also often hidden fees and interest rates that can increase dramatically without warning. Consolidation may not improve your credit in the way you expect, so be sure to read all the fine print.

  1. Avoid changing jobs.

It goes without saying that changing jobs is not something you should do in the middle of purchasing a home! One of the things lenders look closely at is your employment history. They want to be sure that you are financially stable and capable of making your loan payments.

By changing a job before you get your loan, you make yourself less appealing to the lender. Changing situations may cause the lender think you are unstable, or that you won’t have a steady income to keep up with the mortgage. The word stability is something lenders love.

Keep your move under wraps until after the closing takes place.

  1. Don’t shift your finances around before getting the loan.

When a lender pre-approves you, the approval is based on the current state of your finances. You want to maintain that state – the one that got you the pre-approval – at all costs. Sometimes buyers make the mistake of shifting their money around to better position themselves, but this is a mistake.

Wait to make any financial changes until after you have gotten your mortgage. If a lender sees you moving money around various accounts, they will ask for an explanation.

You will need to give them a detailed accounting of why you moved your money around. Avoid making this mistake and keep your money in one place before closing.

  1. Don’t start banking at a new institution.

Your bank may have made you angry or upset. Or maybe you saw a great offer from a competing bank that you just can’t pass up. Well, you do need to pass it up, because changing banks before getting your loan can disrupt everything.

Just like the job and the finances, your banking history and status is part of the equation that leads to you getting pre-approved. Change your bank, and you may not get final approval.

  1. Avoid buying a car…or motorcycle, RV, boat, etc.

Without a doubt buying a car while also purchasing a home is a common mistake. Doing so is also at the top of the list of what you shouldn’t do before buying a home. Sometimes the feeling of knowing you are finally going to get a home of your own can be so exciting that you start looking at other ways to improve your life – like buying a car.

Unfortunately, purchasing a car can throw a wrench into your home buying plans. Your loan pre-approval was based on the state of your credit and your debt load at the time of pre-approval before you bought a car. Adding the debt that the car purchase will bring may make you unable to get the loan for your home.

  1. Don’t buy furniture or household goods on credit.

Another mistake many home buyers make is using credit to start preparing for their new living arrangements. You may want to start buying furniture and appliances to fill up your new home and make it truly yours, but hold back.

Taking on new debt, even for furniture or other household related items, will change the state of your credit and may throw up a flag for the lender that leads to the loss of your loan approval.

  1. Avoid making large deposits into your bank account or making cash deposits.

Money that appears suddenly in your bank account makes lenders uneasy. In fact, they prefer for you to have the money that is going to your down payment in the same account for at least two months.

Lenders refer to the two month period as “seasoning,” and consider it a demonstration of stability and your ability to cover the loan payments. Whenever you make a significant deposit or start doing unusual or unexpected things with your finances before the home purchase, the lender may begin to scrutinize the loan and might back out.

The bank could, in fact, think it’s fishy to see large deposits moving in and out of your account, especially if that hasn’t happened before. Doing as little as possible to make a lender scrutinize your finances.

  1. Avoid lying or stretching the truth on your loan inquiry.

You may have no intention of lying about your finances when you fill out a loan application, but the point needs to be stated regardless. Lying on a loan application is fraud, and if the lender finds out that you mislead in any way, you will almost certainly lose your loan.

Even stretching the truth or making an honest mistake that is inaccurate, can cause you significant problems if the truth is discovered. So be very, very careful that all the information you put down is entirely accurate. Falsifying knowledge is a definite no-no when applying for a mortgage.

This a significant home buying mistake that can put you in a horrible spot.

  1. Don’t let anyone make inquiries into your credit.

Any time you apply for a credit card, a loan or even try to sign up for a new service, like a cell phone service, the company you are working with will probably make a credit inquiry. They do this to determine if you are a safe risk, much as the mortgage lender does.

But when the mortgage company sees that inquiries are being made, it may assume you are trying to take out more debt – even if you aren’t. While one or two queries may not be enough to lose your home loan, there is no reason to take unnecessary risks when you are so close to getting your home.

One mortgage myth worth knowing – having your credit checked by multiple lenders when buying a home does not affect your credit score all that much.

From MyFICO – “FICO scores are more predictive when they treat loans that commonly involve rate-shopping, such as mortgage, auto, and student loans, differently. For these types of loans, FICO Scores ignore inquiries made in the 30 days before scoring. So, if you find a loan within 30 days, the inquiries won’t affect your scores while you’re rate shopping.”

  1. Don’t spend the money you are going to use to cover closing costs.

For many home buyers, the period surrounding the home purchase is one of financial scarcity. Money may be tight right now, which can make the money you saved to cover closing costs tempting. But avoid spending it.

The last thing you want is to be unable to cover closing costs when you are at the point where you almost have your new home. Stay strong and avoid spending it if you can help it. AND, Don’t overspend on a home!

  1. Don’t overextend yourself.

When buying a home, lots of lenders will gladly give you what they think you can afford on paper. What you qualify on paper, however, doesn’t necessarily mean what you’ll be comfortable living on day to day.

Some buyers make the mistake of really overextending themselves. They end up becoming a slave to their home. If going out to a nice dinner from time to time is something you have been accustomed to be more conservative with your house purchase.

  1. Avoid being a co-signer for anyone.

When you co-sign a loan, you are obligating yourself financially. It does not matter that you are not the primary person on the loan. If the lender needs money and is unable to get it anywhere else, it will come looking for you to pay.

Home lenders are well aware of this fact and are therefore disapproving of any applicant that decides to co-sign. As with all the other points listed above, you need to focus on keeping your credit and financial situation stable and constant until you have closed on the house.

No matter how badly you may want to help out a friend or family member, try to postpone co-signing until you have the money for your home purchase.

  1. Don’t spend more than the value of the home.

There are times when real estate markets become extremely hot! In real estate jargon, we call this a “seller’s market.” Most of the country has been experiencing these conditions over the last few years. Buyers have been put in the position where winning bidding wars are the norm, not the exception in many places.

In fact, you’re more likely to see fancy ways to beat the next guy to the punch like an escalation clause in an offer. When you are in an environment such as this, it is easy to overspend as a buyer. After all, if you have lost out on a few homes, you’re more than likely going to reach to get a house you love.

When involved with multiple offers it is not uncommon for the sale price to be pushed significantly above asking. While the buyer may be willing to do this, a lender may not. When the home doesn’t appraise, the borrower may be stuck putting up more money or risk losing the house. You can’t assume the seller will be cooperative and drop their price. You could be rejected for the loan if you can’t make up the difference.

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