 Personal Finance PowerPoint Presentation. Common mistakes of first-time home buyers. Get ready to get financially fit by practicing personal finance. Most of this information can be found at Investopedia. 11 mistakes first-time home buyers should avoid. Which you can find online and take a look at the references, resources, continue your research from there. This is by Deborah Kearns, updated March 28th, 2022. 11 mistakes first-time home buyers should avoid. Buying your first home can be an exciting and nerve-wracking experience. So of course, the purchase of a home for most individuals, it's going to be one of the largest investments that we have and therefore clearly one of the ones that we're gonna wanna use the adage of measure twice, cut once, as opposed to simply trusting our gut because we haven't been able to train our gut for those long-term types of decisions we want a more formal process for the purchase. So you not only have to find the right place, but you also have to find the right mortgage with low inventory in many local markets and rising home prices nationwide. Finding an affordable home can be a challenge. So clearly, typically, most home buyers can't pay full cash for the home. Therefore, financing is needed and shopping around for the mortgage and the financing is another tedious process to the home purchasing, but also exciting and exhilarating. So you may feel pressure to find a home right away, but before you visit houses and start making offers, your financing needs to be in order. So clearly, you don't just wanna say, I'm just gonna go out there and start looking at open houses and stuff unless you're kinda doing that as a hobby because typically the first thing you need to do is think about where you wanna be in terms of what's your home needs, why do you want the home and then what's your financial situation, what types of homes can you afford and that basic area narrowing down the amount of walkthroughs and whatnot that you might be able to do because then you can kinda narrow that process down a lot from that point. So that involves making sure your credit history and credit scores and debt to income ratio and overall financial picture will convince a lender that your credit worthy enough to borrow money. So clearly, you might wanna think about when you're looking at the financing situation, what are the requirements of the finance or typically a bank or another financial institution and they got common kind of heuristics such as the credit score, the debt to income ratio and so on and so forth, your income that they will then use to do calculations to determine whether you are credit worthy or not. But remember, as you think about the financial institution and getting a loan, your goal on the bank is not to try to have them help with your financial planning in terms of your budgeting process to determine how much you can afford. They're trying to determine how much they think you can afford to give you a loan that's different from on your side which you should do your own budgeting, your own income statement and so forth to do your own budgeting to determine how much you think you can afford when you're looking at financing from the bank, you're not thinking of them as a financial planner, you're trying to get as much financing available to you as possible. Not that you're gonna take that much financing if someone comes to us with a credit card and they say, I'll allow you a credit card with an upper limit of $500,000, that doesn't mean that we're gonna go out and spend $500,000 but it's nice to know that I could do that if I wanted to do that and that's a similar kind of thing here. We want to have the credit available to us not that we're actually going to use it per se but then we're gonna do our own budgeting. So many first-time buyers tend to make a number of missteps in the mortgage and home buying process. Here are some of the most common mistakes to avoid. Number one, not keeping tabs on your credit. So you wanna take a look at your credit information because I can have a substantial impact on the lender's decision-making process. One of the key boxes you wanna check off is having a sufficient credit score. So no one likes surprises especially before buying at home. So if you or your spouse have an obvious credit issues such as history of late payments, debt collection actions or significant debt, mortgage lenders might offer you less than ideal interest rates and terms or deny your application outright. So we wanna kinda check our credit history if we've got blemishes on the credit history then of course that can have a negative impact on the ability for the lender to think that we are a credible person to lend to. And so there's a couple boxes that we kinda need to check off when we're talking to the lender. Either situation can be frustrating and can push back on your ideal timeline. Note when you're thinking about the financial institution that obviously it's a business negotiation. You're getting financing. Some people when you get financing you might think, well this is like they owe me financing cause there's government regulations or something and some kinda thing like that. But no it's obviously the bank is making money by giving you the loan. They want to give the loan cause if they give the loan they make interest on the loan, that's how they make money but they have to balance that versus the risks that you don't pay them in the future because obviously the money that they're gonna make is future money that they don't have at this point in time and so these are the types of things that are gonna balance out the risk versus their rewards such as do they think you'll actually be able to pay them back? Do you have a history of not paying people back? That's gonna be one of the things that you would think they'd have to take into consideration to make that balancing act work. So to tackle potential problems in advance check your credit report for free each year at annualcreditreport.com so you can go and check your credit reports in the three major credit areas from each of the three credit reporting agencies that's this TransUnion, Equifax and Experian. So it's a little tricky to kinda do that at first but once you do it a few times you can check your credit history on those three major indices. You can dive into the weeds in terms of what exactly the differences are between them and the pros and cons but basically you'd like to be looking good on the three of them and remember if you're the bank usually you kinda think of it as there's this threshold that you wanna be over you want your credit score over a certain threshold and then usually they're gonna be more likely to give a loan. If you go over that threshold and then you increase it a little bit more and your credit history is stronger then that might be good the bank might be more beneficial but it's not likely that you're gonna have a beneficial return from the bank or better interest rates in alignment with a further increase in the score, right? So you can think of it kinda more like a line that the bank wants to be checking off. Credit score is good, what does good mean? Good means it's in this range. Good means it's over this dollar over this line item amount. What if it's way over that line item amount? Well great, but that might not lead to a whole big line of potential other benefits it's one of the major checks that need to be checked off. So look for errors in dispute, any mistakes in writing with the reporting agencies and creditor including supporting documentation to help make your case. So if there's a blemish on your credit history it's like someone said that you didn't pay something back or something like that you think it's wrong then you can dig into that more and try to settle that try to increase your credit score for additional proactive help consider utilizing one of the best credit monitoring services. So if you find current but accurate negative items such as late payments or delinquent accounts there's no way to remove those items quickly. Unfortunately, they'll stay on your credit report for seven to 10 years. What? It's horrible, life is over, but whatever. But you can boost your score by paying your bills on time making more than the minimum monthly payments on debts and not maximizing your available credits. Above all, be patient. It can take at least one year to improve a low credit score. Also, check to see if your bank, credit union or credit card provider gives a free access to your credit score. If your score is below 620 you may have trouble getting approved for a conventional mortgage. So that's like the threshold line that you can kind of look at as a threshold. It could increase or decrease and so on but that's kind of like a line that you can consider. To qualify for an FHA loan you'll need a minimum credit score of 580. So now you got the FHA which might be there for people that have more struggling kind of circumstances possibly a lower credit score than you might be able to get the FHA. Of course, now you're talking about government intervention kind of situations which can have pros and cons. Remember that if you're talking a business negotiation between you and the bank and both people have all the information then it's a market transaction. If you bring in government incentives or policies and whatnot that the more that mixes up in the market there could be good things that result from that but there could also be negative components as well. Meaning, for example, we've seen in the past in part some of the government regulations possibly allowing for people to pick up loans that the bank would not otherwise give given the fact that they have the capacity to sell them on secondary markets and so on and so forth. So again, just because you might be able to qualify for a loan which is more likely to be the case with government intervention kind of programs doesn't mean that just should. It's nice to have the capacity to be able to do it but you wanna keep the financing separate than your own kind of budgeting information. So you got the 580 to use the program's maximum financing 3.5% down payment which is far less than you might see under a traditional kind of situation on the down payment which again, the lender normally would be skeptical of a smaller down payment because that gives less of a cushion in equity in the event that there's a decrease in the market. So if you have a credit score lower than 580 a 10% down payment is required. Number two, searching for the homes before getting a pre-approved. When you find the perfect house, there's no time to waste and many hot markets you'll be up against multiple bids in stiff competition. So clearly it's a market of course so when you are competing against other people especially if the seller, if it happens to be a seller's market meaning there's a lot more buyers than sellers there's then the seller has the advantage in that case you wanna be able to go into the purchasing process if you're serious about it meaning if you're going around and just kind of perusing and see the homes that are out there but you're not ready to pull the trigger as they say not really like killing anyone but you know like money trigger you pull in the trigger to get the money to shoot at the other guy so that they sell you the home. If you're doing that then they're gonna wanna sell the home fast, right? So I mean, if you go into the process and you have the money available ready then obviously that's gonna be an advantage over someone that does not. So sellers are unlikely to consider offers from buyers who don't have a pre-approved letter from a lender. A pre-approved letter shows a seller that the lender has done its due diligence to ensure you have the means and motivation to repay your bills based on your credit history and score income and employment history financial assets and other key factors. In a competitive market sellers won't take you seriously without a pre-approved letter and you should lose out on a home you really want. So if one person's saying I'm gonna pay you 500,000 the other person's saying I'm gonna pay you 500,000 and one's like I got either cash or if not the cash I've got someone the bank's backing me up here's a letter and the other guy's like I promise I'll pay then unless you really know that other guy well and they don't lie and so on then you're probably gonna go with the one that has the cash and then the one that has the support from the bank and that's how it works. So these documents list the loan amount for which you qualify your interest rate and loan program and your estimated down payment amount. In some cases, especially the higher cost homes or in super competitive markets lenders might ask you to provide proof of funds for a down payment. The pre-approved letter also includes an expiration date usually within 90 days so you got that 90 days to work with. Number three, not shopping around for a mortgage home buyers can leave a lot of money on the table when they don't shop around for a mortgage. So it can get kind of complex to compare and contrast mortgages because you got different lenders that you can be dealing with and then you can get into different types of mortgages and all that gets quite complicated. The first place you might think to go and probably the first place that you would look into would be the financial institution that you primarily do business with possibly your bank but that's not the only place you could go to but that might be a starting point you might then look into the standard kind of loans hoping like the standard loan being a traditional 30 year fixed loan to determine what the rates would be and then you might vary from that baseline by saying, what if I compare this loan to other lenders for a similar loan? Now, if you're talking about large lenders, large financial institutions and you're talking about a situation where you will have all the boxes checked off, credit score, you got the down payment and you've got enough income, debt to income ratio then you would think that you would have a more comparable a somewhat more comparable items between large financial institutions with all the boxes checked off but of course when you get into situations and but then you can check multiple financial institutions when you get into situations where you have less of the boxes checked off then it can get a little bit more confusing, right? In terms of which financial institution would be willing to give you the best loans in that kind of instance and then of course you can deviate in terms of the type of loan that you might be taking out and obviously that opens up a whole wide range of more variants that gets complex quickly. So applying for mortgages with a few different lenders gives you a better sense of what you can afford and lets you make an apples to apples comparison of loan products, interest rates, closing costs and lender fees. So note that when you look at the loan you might first think well one do I qualify? That's number one and so which ones are letting me qualify and then to the interest rate but you can also mix up these other items with the closing costs so you might have someone that has higher closing costs but a lower rate and then the question is will the other one has a lower rate and a higher closing costs and you can look at things like the APR and whatnot to try to figure out which would actually be better and it would kind of be dependent upon how long you're gonna stay in the home and whatnot but if you have two documents they're usually gonna be comparable. The approval documents are somewhat standardized so you can at least compare them if you got them side by side in a fairly standard comparative way. So more important, shopping for a mortgage puts you in a better position to negotiate with lenders to get the best deal possible. So as you shop lenders pay attention to fees and closing costs which can add up at the closing table while some of the pricing variances may not seem big on paper now they can add up to significant costs savings over the lifetime of your loan. So clearly if you're talking about a higher loan amount or something like that or a higher interest rate then even a small change over 30 years can be quite significant. Keep in mind that some lenders will offer you discounts or points a way to buy down your interest rate upfront. So if you get into the points kind of calculation then you gotta think about okay what if I pay money upfront to buy a lower interest rate in order to get the interest rate lower and that gets complex because then you gotta think about is that worthwhile over the long run typically the longer you're planning to stay in the home the more likely that type of calculation would work if you had the cash flow to even do it upfront in the first place. So this increases your closing costs and other lenders that promote low or no closing costs tend to charge higher interest rates to make up the difference. So that's the games that they're gonna play right? What can you adjust if you were a lender to try to make the circumstances kind of the same over the life of the loan but have different, you could adjust different things what could you adjust? Well, you could adjust, you know the loan amount is basically gotta be fixed right? So now you've got the interest rates which can vary but you can also play with the closing costs so you can have higher or lower closing costs. So if you have that closing costs the money you're gonna get upfront higher then you might be able to kind of lower the interest rates and these are kind of the things that we have to compare when you're doing the side by side comparison things like an APR calculation can help but there's no one statistic that's really gonna tell you the benefits between the two you kind of map out how long you're gonna be in the home and so on but doing the side by side comparison will at least alert you to those differences and then you can start to dig down on them a bit more. So home buyers in the US pay on average $6,837 for closing costs according to a 2021 survey from CloseCorp, a real estate closing cost data firm in addition to the checking with your current financial institution either a bank or credit union ask mortgage broker to shop rates on your behalf. So we talked about the difference between someone who like works at the bank and a mortgage broker the mortgage broker is someone who's gonna be shopping for different at different financial institutions. So they work differently if you're talking to someone that's working at your financial institution they give you the array of mortgages available at that financial institution possibly the bank mortgage broker working with multiple financial institutions then is looking between multiple institutions. So mortgage brokers aren't lenders they act as a matchmaker between you and lenders in their network. So you're not like not like in a dating situation really with matchmaker but more like a lender a lender situation. So finding a lender that is going to be appropriate for the home buyer instead of just going to that one banking institution that's what the broker is doing. So they can save you time and money by comparing multiple lenders who have products that fit your needs. Also it's worth looking into some direct lenders other online or in person to see what they offer. So clearly you can do your own work as well when you talk to the brokers they might not have the capacity for they might be somewhat limited to the number of lenders they're looking into. So you might think that the broker is just gonna look at all the lenders available but they might only have the capacity to work with certain lenders so you still could have some restrictions even with the broker so you might wanna do your own comparisons as well or possibly even work with multiple brokers or something like that. But no matter what you do I first kind of think about the baseline scenarios as if you had all the checks checked off as if you were going to a large financial institution and that being your actual bank most likely that's kind of your baseline starting point and then see if you can look at the variance from that point into a comparison to that baseline as all these other factors come into place that might give you some place to kind of ground yourself as you're doing all these kind of comparisons. So using a mortgage calculator is a good resource to budget some of the costs even better I think is Excel personally cause you can actually map out the full amortization tables you can do tax calculations and so on. We'll do some problems on that and we'll dive into that a bit and it's way more fun with Excel I think. But in any case, by applying for a mortgage with several lenders you'll receive loan estimates to compare rates and closing costs side by side. Also if you do most of your rate shopping with 30 days the multiple credit checks lenders perform will count as one hard inquiry and are unlikely to lower your credit score. There's no golden number of lenders you should shop but having the three to five loan estimates in hand will give you a strong basis for comparison. So three to five you wanna have maybe a couple out there so you can do some shopping around, shopping around. Number four, buying a more expensive house than you can afford. When a lender tells you that you can borrow up to 300,000 it doesn't mean you should. So it's just like a credit card, right? I want my credit card to tell me that I can borrow infinity dollars if I wanted to. But if they told me I could borrow infinity dollars I'm not actually gonna borrow infinity dollars but if I ever needed infinity dollars the credit card it's nice to know that it's there. So if you max out your loan your monthly payments might not actually be manageable. Typically most prospective homeowners can afford a loan amount between two and 2.5 times their gross annual income. So oftentimes you use these kind of heuristics that are based on your income level. That's what the bank's gonna do too because the bank has a trust issue of course, right? They can verify your income with things like tax returns and W-2s. They cannot verify all your expenses and your living style and whatnot. But you might have an idea of that so you can actually do an income statement, right? You can look at your income and your expenses that you have and get a better idea of your particular lifestyle and what you can possibly afford that's why you wanna do your own budgeting not be dependent on the bank just whatever the bank happens to be able to be lending which could be dependent on a variety of factors which do not have your needs in their heart, right? That's not what they're looking at. It's they're just doing what they do over there, right? And so you're gonna say, I'm gonna get as much as I can get available from the bank and then do my own budgeting over here and I'll tell you how much I want. So in other words, if you earn 75,000 per year you might be able to afford a home price between 150,000 or 187,5 so that's a kind of heuristic. So Investopedia Mortgage Calculator can help you estimate monthly payments which is a better barometer of whether you can afford a home in a certain price range. Buying a home buying a more expensive house than you can reasonably afford can lend you in trouble if you have a stretch your monthly budget to make mortgage payments. So obviously you don't wanna be in a tight situation where you can't make the mortgage payments because even if the equity in the home goes up it's hard to access that equity in the home. It's not fluid cash. You'd have to refinance or something like that. So in other words, you might wind up feeling, quote, house poor in quote and experiencing buyer's remorse. Meaning there's kind of a difference between different kind of assets of course. So it seems obvious but it's easy to think I'm gonna buy the home. I'm gonna have this big $500,000 value on my balance sheet. I'm worth $500,000 because I got this home and then I've got the loan on the books but even if you had the $500,000 and no loan on the books if you needed to pay bills you can't really pay it with the house, right? You could take a loan out on the house or something like that. But it's possible to have your equity situation meaning your net assets, assets minus liabilities look good but still be in a cash flow problem meaning you don't have enough actual cash to pay the bills that are coming up even though you have a significant amount of assets over the liabilities more than the liabilities. So you gotta kind of think about the cash flow. Also, consider that home ownership comes with added expenses in addition to those monthly mortgage payments. You need to save for inevitable maintenance expenses, repairs, insurance, property taxes, homeowners association fees if applicable and other costs that you do not have to pay as a renter. So when you're doing your budgeting and moving into the home, remember that you're gonna have the property taxes of course, possibly insurance, you might have homeowners associations and then something that people often in my opinion don't always take into consideration is the fact that they actually have to repair the home. Whereas if you've been renting your whole life you just call up the maintenance person and they repair the home. So if you're someone that works on homes and whatnot then you have a pretty good idea of that and that might be one of the reasons you want to go into a home because you like working on your home you want to remodel your kitchen yourself and that kind of stuff, which is great. That's a great thing. But if you're used to renting then you're probably not taken into consideration possibly these big ticket costs that come that hit you all of a sudden that you have to make sure you take into consideration in a similar way as some people might take into consideration the fact that their car is gonna probably die every 10 years or so and you gotta save up to make sure that you have the capacity to get another car when you need one. So stretching your monthly budget to cover your mortgage might also mean you can't save up for an emergency or those house report pairs and it will eat up your cash flow for other financial goals as well, such as that vacation I'm going on once I can go stuff, do stuff. Don't fixate on the maximum loan amount for which you're approved but on whether you can afford the monthly mortgage payments that are priced at that price point. So again, it's not up to the bank to determine how much you're gonna get, right? That's how much they're willing to give you which hopefully is higher than the amount that you want to get but we've talked about that. Enough, we've heard that. Okay, first time homeowners might want to be extra cautious and buy a home below their maximum budget. Number five, not hiring a real estate agent trying to search for a home on your own is time consuming and complicated. So if you've never searched for a home before, you might say, well, the real estate agents is picking up a hefty chunk there. Why don't I just cut them out of the process? You can but it depends how much experience you have because they do have significant amount of services that you may not have experience with if you've never purchased a home before. So a professional experienced real estate agent can help you narrow down your choices and spot issues both with the physical property and in the negotiation process with sellers. Some states require a real estate attorney to handle the transaction but attorneys won't help you search for a home. They can help you draft and offer negotiate purchase agreement and act as a closing agent. So you could have different agents that are doing different things. The attorney obviously is more on the actual contractual side of things possibly. A real estate agent might be able to help you more with just basically the searching process, dealing with the viewing the home and giving you advice on the home and that kind of stuff. So also if you go on a showings without your own real estate agent, a seller's agent might offer to represent you. This can be dicey, which can lead things to become icy but in case it can be dicey because the agent doesn't have your interest in mind. So clearly you're talking to the seller's agent who is representing the person on the other side of the table and their interests which are counter to your interest. Their goal is to get the highest and best offer for the seller. Your goal is to get the lowest offer to lower the price. So having your own agents whose interests are more aligned with yours will help you make more informed choices. So again, you can kind of act as your own agent but it would be nice if you're unexperienced in this situation to have someone that could give you some more informed advice in that situation. So best of all, the cost of enlisting an agent won't come directly out of your pocket. As a buyer, you generally don't pay for the buyer agent's commissions. It's usually paid by the seller to the seller's agent who then splits the commission with the buyer's agent. That's the kind of customary type of situation of how the agent situation, the payment is typically gonna be broken out based on the sale of the home. So number six, opening or closing leans of credit. So you can still be denied a mortgage even after being pre-approved for one. Mortgage lenders check your credit during pre-approval and again just before closing before giving you the final green light. And the interim maintain the status quo in your credit and finances. So if you got approved for credit, then you don't do something crazy like going out and taking out another loan or maxing the credit card or something like that in between that time period because they're gonna do another check at the end there. So that means that not opening new lines of credit or closing existing lines of credit. Do so, doing so can lower your credit score and increase your debt to income ratio, both key reasons for a lender to deny financial approval. So instead, wait until after you've closed on your home to take out new lines of credit like a car loan or a new credit card. And while it's great to pay off a credit card account or loan before you close your home, closing the account removes that credit history from your report. Length of credit is one of the key factors credit reporting bureaus use to generate your credit score. Instead, leave the account open and active but don't use it until after closing. Number seven, making big purchases on credit. Just as opening or closing lines of credit can ding your score, so can running up existing accounts. Again, keep your credit and finances stable until you close your home. So you won't wanna do anything crazy with regards to finances while you're in the process of purchasing the home because that could mess up the approval process that you already have because they're gonna check it again. So use instead or better yet delay buying new furniture or a television until after closing. So you might be saying, I'm trying to, I wanna buy some stuff in my new home I'm locked in the deal, but it's not quite done yet. So you probably wanna hold off on that. Just hold off, just stay calm. So also, you want to get a sense of how your budget will handle your new home ownership costs. You might want to wait a few months before adding more monthly payments for big purchases into the mix. So before you buy that pool table or something. You might wanna check out and see what your monthly budgeting looks like after the home purchase. So number eight, moving around money. Another big no-no in mortgage underwriting, making large deposits or withdrawals from your bank account or other assets. If lenders suddenly see unsourced money coming in or going out, it might look like you got a loan which would impact your debt to income ratio. So clearly they're looking at how much like loans you have out there. And obviously when people know what the lenders are going to be looking for, then they might try to finagle the system. They might try to do something sneaky. They might try to get a loan that they're not telling to the lender. So they're not telling them about the debt, the fact that you have to pay back the loan. But now they all of a sudden have money in their account or something like that. And those kinds of transactions are gonna look fishy or sneaky or something that they might could cause problems. So lenders aren't worried about the transparent deposits such as bonus from your employer or IRS tax refund. So if they look at your banking account, if they look back at your bank account information which they might ask for as part of the financing process and they see deposits and they say, oh yeah, that was the year in bonus for your Christmas bonus or whatever came from your employer. But then if you just have a random like $30,000 deposited in there and they're like, what was that for? And you know, I don't, and you're not giving them an explanation of it, then they might say, well that looks like it could be a loan from somebody that you might have to repay which means you have a liability and so on. So, but if a friend wires you money or you receive business income in your personal account, a lender will demand proof to verify that the deposit isn't a disguised loan. Expect a lender to ask for a bill of sale if the deposit is from something that you sold, a canceled check or a pay stub. So you can use a gift from a related or friend forward your down payment. However, many loan products require a gift letter and documentation to source the deposit and verify that the donor isn't expecting you to pay back the money. So you might be saying, well, I got money from a friend or my family to pay the deposit, but how does the lender know that they don't want the money back, right? If you got $30,000 to pay the deposit, it looks like a loan unless it was a gift and if it was a gift, then you need to verify that it's gonna be a gift to the lender because if it's a loan, it looks like you gotta pay it back, which has an impact on your financing. So number nine, changing jobs. Well, changing jobs may benefit your career. It may be complicated, your mortgage approval. So obviously, what does the lender want? They want you to be like a 10-year professor that's worked somewhere for 10 years and the place can't fire you if they had to. Even if you did something horrible, they can't fire you. That's what they're looking for for security, right? So if you're changing jobs, then they're gonna be a little skeptical over there. So a lender wants to ensure you have stable income and employment and that you can afford to repay your mortgage. If you were pre-approved for a mortgage based on certain income and job, any chance it changes in the interim before closing can be a red flag and delay your closing. So again, they don't even like, if you're a sole proprietorship, it's gonna possibly be more difficult than if you were a 10-year professor or if you're a salaried person, you probably have a better, you look better to the lender than an hourly person, even if you make substantial income as an hourly person and so on. And you can see why from the lender's perspective. For approval, you generally must provide proof of two consecutive years of steady employment and income. So you typically want two years. They can check that on your tax return and with the W-2s, for example. And again, if you're a sole proprietorship, you have your own business, they're probably gonna be more skeptical on the lending side of things because there's more risk involved in that kind of stuff. So when you change jobs, that continuous record of income and employment is disrupted partially if you take a lower paying, particularly if you take a lower paying job. Also, if you switch to a role that pays 25% or more of your salary in commissions, lenders want to see that you've earned that income over two years, over two straight years. So if you get commissions, that's gonna be something that varies based on your performance. So if you did really good last payroll or something like that, and then last year you weren't doing so good, then it doesn't look like what's gonna happen in the future they don't really know. Whenever possible, lenders recommend waiting to switch jobs until after your loan closes. If that's not doable, tell your lender right away. Number 10, skipping the home inspection. Unless you have a lot, unless you have a lot of cash to fix up a home and are willing to risk having to pay for unforeseen repairs, waving a home inspection can be a costly mistake. Home inspections are meant to find major issues with a home and they are intended to protect the buyer. If you don't get an inspection, you will have no recourse if a major issue such as crack pipes or water damage, surfaces after you close on a home. That means you might be footing the entire bill to fix those issues. When you make an offer on a home, you can include a home inspection contingency that gives you a penalty free exit from the deal if a major issue is uncovered and the seller is unwilling to fix it before closing. So you can have the home inspection in there. If they say, hey, the whole thing, the base is cracked or something like that, then you can decide what to do at that point. So with that contingency, with that contingency in place, you can withdraw your offer and usually get your full earnest money deposit refunded. The home inspection fee is non-refundable and typically paid by the buyer to the home inspector up front. It typically ranges from $300 to $500 depending on location and the size of the property. It's a small price to pay when you weigh it against the potential cost of having to replace a furnace, water heater, roof or other big ticket items which could amount into the thousands. So you might consider additional inspections such as a pest inspection, mold or radon inspection or a sewer scope, for example, if your lender requests it. So these and other inspections can help protect your investment and safety. Number 11, not comparing the loan estimate to the closing disclosure. Your lender is required by law which provides you with a closing disclosure three business days prior to your closing date. This document lists the exact costs you're expected to pay at closing including your down payment closing costs, loan details and terms and other important information. It's a five page document. Take the time to compare it against the initial loan estimate you received to make sure you aren't being charged extra fees called junk fees by your lender or other parties involved in the transaction. So clearly you got an estimate on the loan. Now the loan's starting to be finalized here. So you wanna be comparing what the loan's actually going to be compared to what they told you on the estimate and see if they did anything funny in that interim period. Also, if certain fees go up more than expected ask your lender to explain why. Make sure basic details such as your name and other identifying information are listed correctly. So you don't run into paperwork issues on the closing day. If you find errors or questionable or unexplained extra fees, tell your lender immediately so those issues can be addressed. In some cases your closing might have to be pushed back to ensure the paperwork is corrected and updated and all issues are resolved. Bottom line, you don't want to inadvertently sabotage your mortgage and your home purchase. Some of these mistakes seem innocent but they can sidetrack your closing and create massive headaches. Talk to your lender about what you should do from a pre-approval to closing to ensure a smooth process and try to keep all of your documents, bank statements, W-2s, deposit records, tax returns, pay stubs and so on organized and updated so you can provide documentation if your lender requests it when it comes time to buy your first home being well read and educated about the lending and real estate process can help you avoid some of these mistakes, not to mention saving money along the way. Further ensure that the transaction goes smoothly by having trained experienced professionals by your side to guide you. This can alleviate some of the stress and complexity along the way.