Around this time 13 years ago, I was under contract to buy my first house.
I thought my home buying journey was almost over because I had finally found a house.
Alas, I was wrong.
This is precisely when my home buying stress started.
It’s actually a pretty common occurrence.
This part of the home buying process is where most of my clients feel the most stress and turmoil as well.
If you have never bought a house before, “under contract” means this:
✅ You found a house you like.
✅ You made a purchase offer to the seller.
✅ The seller accepted your offer, and you have both signed a contract for the home sale which includes the sales terms.
“Closing” is when the actual sale of the house happens.
If you pass a house and the realtor for sale sign in the yard says “pending,” the house is under contract; an offer has been accepted. But technically, the house hasn’t been sold yet.
When you see a “sold” sign, the closing has happened. The home is now officially owned by someone else.
Many things can happen between going under contract and closing. These things can delay the sale or cause the sale to fail completely. If the deal fails, the contract becomes null and void and the house would then become available for sale again.
A fast closing is in under 30 days from the under contract date. 60 days is a standard time frame for closing.
Mine took six months….
This should give you an idea of the amount of havoc that took place between going under contract and closing.
I am thankful, though, that the first closing was a mess because I learned a lot from all the situations that came up.
I would rather have 6 months of closing turmoil because those 6 months eventually allowed me to create some financial flexibility for myself.
And it also makes a “normal” closing so much more exciting for me now. 😬
My third closing, my last one – was a little over 30 days. And I felt like I won the lottery compared to that first closing. Simply because it was smooth sailing.
But it was probably also smooth because I went through so many issues with that first one.
You see mistakes help us to grow.
But only if we make the decision to learn from them.
Here is a sampling of the mistakes that I made while under contract for my first house.
Tuck these away in your mind so you don’t do any of these the first or next time you are under contract to buy a house.
1. Using a lender without a lot of experience.
I used a renovation mortgage for my first house. This type of loan combines the cost of buying and fixing the home into one loan. Which leaves you with one monthly mortgage payment despite having a mortgage and a construction loan.
I had been recommended a lender who had done many of these loans. But, after I got my purchase contract, I didn’t use that lender.
I used one I found on my own, which unfortunately lacked experience.
I don’t remember the exact reason why I decided to go this route, but I did. And the lender’s lack of experience showed in how long it took to get to the closing table and complete the home purchase.
Don’t 👏🏾 be 👏🏾 like👏🏾 me!
Don’t use a random mortgage lender, unless you have a VERY good reason to. It will cause you unnecesary stress!
2. Not speaking up about loan processing mishaps
When you are getting a mortgage, there are multiple people working on your file to get the loan approved. The work to approve your mortgage doesn’t start till after you have a signed contract to purchase a house.
One of the people working on your mortgage file is a loan processor. Their job is to ensure that all documents from all stakeholders are in order and with the right person at the right time. This is to keep the loan application moving along in a timely and orderly fashion.
Think of a loan processor like the loan project manager.
My loan processor was awful.
She was so awful that I actually remember her full name even though I haven’t spoken to her in 13 years.
There were so many documents that had to be resent to her over the course of the six months I was in contract. And the communication from her was not up to par.
I didn’t report her to her boss until a few days before my closing. And that was a mistake.
The final straw that caused me to speak up is when she sent a message that my interest was going up by two points 4 days before my closing date. No explanation, no context. And she proceeded to not answer calls or emails for days.
At that point, I drove to their office (two hours away from me) and demanded to speak to her boss.
My mortgage interest rate was fixed and lowered back to where it was. But I might have saved myself time and headache if I had reported her ineptitude earlier.
Or simply switched to a different lender once we hit that 90 day mark and no closing date was in sight.
There is a lot of interest money on the line for the lending institution – as in hundreds of thousands of dollars that they will make on your loan. They need YOU.
So you absolutely have the upper hand when getting a mortgage. I didn’t feel like it when I was getting that first mortgage.
Now I know better.
And now you do too.
So don’t accept less than stellar service from the lending institution you choose to work with.
3. Not staying calm during the mortgage application process
A week before my closing date, there was a water bill that was pending that would cause the closing date to be pushed back aagin.
Water bills in New York follow the building, not the owner. So, if we didn’t get the final water reading before closing, I’d have to pay the previous owner’s debt after closing.
The lawyer who was representing me for the closing advised me to delay closing till the final water meter reading came about.
I told him that whatever the bill was, I would pay it. I just needed the closing to be done and over with. It was 6 months into this saga, and I was just fed up and ready to just wrap everything up.
I was expecting the bill to be a couple of hundred dollars max.
To my horror, it turned out to be a little over six thousand dollars!
I made this six thousand dollar emotional mishap and am sharing it with you so that you do not repeat my very expensive mistake!
Keep calm.
Listen to your realtor or real estate lawyer no matter how emotional or stressed you might be getting.
They have done this way more times than you have and likely know what they are talking about.
Listen to the advice that you are paying to get.
4. Not Accounting for closing costs
The only out of pocket money I thought I needed to buy my house was the down payment.
I had no idea I would need additional funds at the time of actually buying the house (closing) and also while under contract.
You might think, well doesn’t the mortgage lender tell you that? The short answer is no.
Ideally, they should, but don’t assume that just because they didn’t say that the funds in your savings arent short, that you are fine. You may not be.
And if you are buying a multifamily house, you will also need reserves (a few months of mortgage payments) in addition to the closing costs.
As a result, to make the first deal happen, I had to borrow some funds from a family member to make the deal work. Otherwise, I wouldn’t have been able to buy the house.
Have more than just your downpayment on hand to buy your house.
6% of the cost of the house is a good start. 10% is better.
5. Accruing more debt once under contract
If you remember only one thing about what not to do once you are under contract to purchase a home, remember this:
do not change anything on your credit profile unless your lender tells you to.
Do not close any credit cards.
Do not open new credit cards.
Do not add more charges to your credit cards.
Do not get a new car.
Do not pay off your car.
Nothing.
Even things that can seem like “positives” on your score like paying a loan off can negatively impact your mortgage approval. So just don’t mess with it.
In my case, I added a few thousand dollars to a credit card balance to pay for the home insurance and flood insurance that was required while under contract. Nobody told me not to use a credit card to pay these.
So here I am now telling you this, so it doesn’t derail your home purchase!
No sudden and unexpected credit moves till AFTER you sign all your closing documents.
I could probably write about 10 more mistakes. minimum…
But I don’t want this to turn into a whole novel. 🤓
The good thing about all these mistakes is that I now have a good sense of what not to do. And since I have shared them with you too, you do as well.
And in spite of all those mistakes, 18 months after closing on the home, my net worth increased by $250K due to a few strategic moves I made when buying the house.
So, know that you will make mistakes.
Know that things won’t work out perfectly.
Know that you will feel like quitting.
But, despite those mistakes, a few right moves can make up for the mistakes.
And in the end, the process will be worth it.
I’ll cover those key right home buying moves that allowed me to quit my six figure corporate job at 36, at my next live event.
Join the waitlist here, so you’re the first to know when tickets become available.
Buying that first house felt like a whole a Netflix show.
I can write a book about all the things that went wrong. From before signing the contract, to closing day, to after closing.
But one thing I know is that it was all worth it. ☺️
Which one of the 5 mistakes would you probably have made if you hadn’t read this?
