3 Not-So-Obvious Mistakes Future Homebuyers Make on Black Friday

By
Real Estate Broker/Owner with domoREALTY

WRITTEN BY ERICA BAHAM, BUYER'S AGENT EXTRAORDINAIRE FOR DOMO REALTY

 

DISCLAIMER: I AM NOT A LENDER and I do not claim to be one. All opinions expressed here are merely the suggestions and observations of a real estate agent. For advice on how to qualify for a mortgage loan, contact your local lending professional.

 

So it's Thanksgiving Day and you're scouring the retail ads and your email inbox for the best Black Friday and Cyber Monday deals you can find. The fact that you plan on buying a home in the first quarter of 2015 has taken a back seat in your mind to that image of yourself scoring that big screen TV you've been dreaming of for the last 15 years, or snatching up clothes and toys at garage sale prices for all the little minions and munchkins on your list.

 

If you're serious about buying a home in the next three to six months, before you brave the crowds, the cold, or any retail site server, read this article. This is advice you need to hear. You'll thank me later. You're welcome.

 

Mistake #1. Being completely oblivious as to how your holiday shopping will affect your ability to get a loan. 

 

Right now, it's easy to focus on having fun and enjoying the holidays and we all know it takes money to do that. However, if you plan on buying a home in the first quarter of 2015, your lender is going to be looking very closely at your credit history in the first months of the year, specifically focusing on how much money you owe in relation to how much money you have coming in. If the lender is running your credit report in January and sees that you spent thousands on holiday travel, gifts and the like, your debt-to-income ratio is likely to be disproportionately higher than it might have been before the holidays or at another time of year. 

 

Does that mean you have to settle for handing out stale Halloween candy and half-open sticks of gum from the bottom of your purse as Christmas gifts? No. For God's sake, keep your nasty pocketbook kibble to yourself. What I'm saying is that you should set aside an amount for your down payment and estimated closing costs before you do any holiday shopping. (Find out how much you need.)

 

Mistake #2. Making big ticket purchases during the holidays that require that you open a credit account. 

 

Whether you decide to spend precious digestive time standing in line on Black Friday freezing your tushy off for that absurdly large flat screen or you decide to join millions of others clicking their fingers numb at work on Cyber Monday, when you do shop, you should only spend the amount that you can pay off within the next 30 - 45 days.

 

Let me repeat that. You should only spend what you can pay off within 30-45 days. IF YOU CAN'T PAY IT OFF BY FEB. 15, DON'T BUY IT! 

 

Why? Because even if you get a great deal on an item with "NO INTEREST UNTIL 2016", you're still adding another line of credit to your credit report. The fact that your payments don't start until later won't matter as much because your lender is looking at your long-term credit viability. It's not just about whether you can afford the mortgage today. You need to be able to afford it for the life of the loan. That's likely the next 30 years. 

 

Mistake #3. Not understanding exactly how much cash you really need to buy and move into your new home.

 

It can be expensive to move. Homebuyers often fail to account for what it will cost them above and beyond their down payment and closing costs to move and make their new home ready for their arrival. Besides the costs of the moving company and travel, be sure to account for the cost of turning on utilities, cable, etc. And if you bought a house that needs improvements, you'll need money for those as well. Did you plan on painting? Repairing holes in the walls? Getting the carpets cleaned?

 

Even though you likely haven’t found your dream home yet, you can estimate a reasonable cushion and go from there.

 

And there they are, folks. Three mistakes you can avoid this holiday season that have the potential to keep your dreams of home ownership from becoming a reality. Happy Thanksgiving. Shop smart!

 

Get more homebuyer tips from Domo Realty here or talk to a Domo Realty preferred lender.

 

 

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Re-Blogged 3 times:

Re-Blogged By Re-Blogged At
Topic:
Home Buying
Location:
Georgia
Groups:
The Lounge at Active Rain
1st Time Buyers
Selling Soulfully
Optimizers
Tags:
credit
buying a home
lending
home buying
no money down
black friday
cyber monday
holiday shopping
christmas shopping
mortgage lending
real estate
xmas shopping

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Ambassador
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Silvia Dukes PA, Broker Associate, CRS, CIPS, SRES
Tropic Shores Realty - Ich spreche Deutsch! - Spring Hill, FL
Florida Waterfront and Country Club Living

Vanessa, those are great points and good advice.  These are the things most people don't consider when they are in the moment

Nov 27, 2014 08:32 AM #11
Rainmaker
562,101
Women of Westchester Working Together
Women of Westchester Working Together - West Harrison, NY
Women helping Women get ahead

Vanessa  - This is great advice.  I just hope the right people see it in time. - Debbie

Nov 27, 2014 10:04 AM #12
Rainmaker
1,317,757
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

Vanessa - great advice

Set aside an amount for your down payment and estimated closing costs before you do any holiday shopping.

Nov 27, 2014 11:45 AM #13
Rainmaker
304,305
Tammy Adams ~ Realtor / Podcaster
Maricopa Real Estate Co - Maricopa, AZ
A Maricopa Agent who Works, Lives & Loves Maricopa

Awesome article. A great time to remind folks how the next couple of months could derail their the upcoming home purchase. You are dead on!

Nov 27, 2014 01:16 PM #14
Rainmaker
817,935
Lanre-"THE REAL ESTATE FARMER" Folayan
Keller Williams Select Realtors-Buy a home in Washington DC. Sell a home in Washington DC - Bowie, MD
I don't make promises.I deliver results.SOLD HOMES

We have to mention these things when we first meet our clients face to face and during the home buying process because sometimes people forget things.

Nov 27, 2014 01:40 PM #15
Rainmaker
2,848,275
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

Remember that sells are around every corner every day and they are not unique really ever--no matter who says it

Nov 27, 2014 03:02 PM #16
Rainmaker
323,365
Fred Cope
Reliant Realty in Nashville, TN - Nashville, TN
Looking For Homes With A Smile

Vanessa, I trust that this Thanksgiving Day has been stuffed with an abundance of family time, and garnished with joy.

You have put forth three excellent points, and might I add one: An increase in debt is an increase in risk.  In recent years we have been awakened to a reality that we should not forget.  Job security is not what it was in past generations.

 The margin between the ability to meet our obligations or not has been trimmed, and the reality is that lay-offs are more certain. Employees may walk into work one morning and be sent back home on layoff; or they may already be temporary help.  Recent actions by the White House will magnify the threat as more illegal aliens flow across our borders working for lower wages and fewer benefits.  Seventy-one percent of those covered by Obamacare are reporting higher insurance premiums.  Furthermore, there is a case pending before the US Supreme Court that may end federal payment assistance to those on the Federal exchange (a large portion of those who signed up on the Obamacare website.  Family budgets may take a beating.  NOW IS NOT THE TIME FOR IMPULSE BUYING, BUT IT IS THE TIME TO PURCHASE A HOME: while interest rates remain low.

The other consequence of taking on unnecessary debt in this environment is that added debt adds burden to the family budget, and increasing the risk of late payments and late fees leading to LOWER CREDIT SCORES, FOLLOWED BY HIGHER PAYMENTS.  

 

Homebuyers should concentrate on reducing debt rather than taking on more debt.

Nov 27, 2014 03:10 PM #17
Rainer
576,523
Sham Reddy CRS
H E R Realty, Dayton, OH - Dayton, OH
CRS

Thanks sharing your thoughts Vanessa

Nov 27, 2014 07:51 PM #18
Rainer
187,458
Rick Snow - Selling El Paso TX
EXIT West Realty - El Paso, TX
Cool Deals on Hot Real Estate in El Paso, Texas

Excellent points. It's hard enought o convince buyers not to do anything that will affect their credit scores during the buying process without throwing Christmas into the mix.

Here's hoping your buyers pay attention.

Nov 27, 2014 08:26 PM #19
Ambassador
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Brian Schulman
Coldwell Banker Residential Brokerage, Lancaster PA - Lancaster, PA
Lancaster County PA RealEstate Expert 717-951-5552

Timely advice, Vanessa.  Early in my career I saw a transaction almost torpedoed by a buyer who purchased new kitchen appliances for her new home before before settlement.  Ever since then I counsel buyers not to make any significant discressionary purchases before settlement!

Nov 27, 2014 08:53 PM #20
Rainmaker
2,546,484
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

Ahh...yes to your #3. I have always asked that question and you cannot pin it down but it will be paid whatever it is...The famous OTD or out the door price

Nov 27, 2014 10:22 PM #21
Rainmaker
3,447,227
Nina Hollander
Coldwell Banker Realty - Charlotte, NC
Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor

Great points, Vanessa, and very timely. No question that many buyers would be conscious of this at other times of the year and then totally forget in the enthusiasm of holiday shopping.

Nov 28, 2014 12:37 AM #22
Rainmaker
321,367
Evelyn Santiago, Managing Broker Heart Realty Group, Inc.
Heart Realty Group, Inc.. - Oswego, IL
Passionate About Real Estate & Our Clients!

Vanessa - Some great points - if only those that are actually thinking of buying a home in the near future would read this!  Debt to income can throw you right out of qualifying for a mortgage....so keep your credit card in your pocket if you are unable to pay cash!

Nov 28, 2014 02:08 AM #23
Rainmaker
344,055
Scott Gleason
RE/MAX Select - Westfield, NJ
Westfield NJ New Homes Specialist

These are some really great points for anyone purchasing or considering the purchase of a new home.  This is information we need to be offering to our buyers.

Nov 28, 2014 03:53 AM #24
Rainmaker
908,388
Pamela Seley
West Coast Realty Division - Murrieta, CA
Residential Real Estate Agent serving SW RivCo CA

We all need a place to live, whether we rent or buy. Taking on debt, whether a renter or home owner, should not be taken lightly. 

Nov 28, 2014 05:02 AM #25
Rainmaker
635,115
Claude Labbe
Real Living | At Home - Washington, DC
Realty for Your Busy Life

Vanessa,  correct.  I'd suggest however, this is true all year long.  I've had to remind people to not buy a new car as we are halfway through the home purchase process without first ensuring their lending officer approves that idea.

I'd even had buyers who've had to return engagement rings to ensure we were able to settle.

So, yes, don't go shopping.  Go see a movie, or go to a tree farm to get a tree instead.

Nov 28, 2014 02:05 PM #26
Rainmaker
1,584,363
Sandy Padula and Norm Padula, JD, GRI
HomeSmart Realty West & Lend Smart Mortgage, Llc. - Carlsbad, CA
Presence, Persistence & Perseverance

Vanessa: All true what you have written here in your timely blog post. I have to laugh at all the ads, particularly the new car ads. Do the manufacturers really think people will commit to a major purchase under the emotion of the holiday season? Silly!

Nov 29, 2014 02:50 AM #27
Rainmaker
863,906
Les & Sarah Oswald
Realty One Group - Eastvale, CA
Broker, Realtor and Investor

Vanessa - Very timely and informative blog. Buyers looking to purchase a home should consider all financial facets before they get tempted during the Black Friday and Cyber Monday. 

Nov 29, 2014 04:29 AM #28
Ambassador
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Larry Bettag
Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001 - Saint Charles, IL
Vice-President of National Production

I just posted on a parallel thought.  People lose their brains on Black Friday and, can, in the long run, lose their opportunity to own a home too!

Nov 29, 2014 05:13 AM #29
Rainmaker
82,193
Vanessa Reilly
domoREALTY - Atlanta, GA
domoREALTY, Homes for Sale - Atlanta

My name is Erica Baham and I wrote this article on behalf of Vanessa Reilly and Domo Realty. Thank you everyone for all your comments and feedback. I'm glad to hear that you agree. Feel free to share.

Nov 30, 2014 03:27 AM #30
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