(Especially as we head into another chilly Michigan winter)
Buying a home is exciting, especially here in Ann Arbor where the houses are as charming and sometimes as quirky as the people who live in them. Between the tree-lined streets, the energy of downtown, and the endless parade of maize and blue open houses, it’s easy to get swept up in the fun part of house hunting.
While there is plenty of advice out there about what you should do, like getting pre-approved, hiring a local agent you trust (hi there), and sticking to your budget, it’s just as important to know what not to do. In this market, one wrong move can turn your dream closing into a cold-weather headache.
And since the first frost is on the horizon and “for sale” signs are starting to blend in with the leaf piles, now is a good time to talk about what to avoid if you want to end up celebrating the holidays in your new Ann Arbor home instead of explaining to your lender why your finances suddenly got complicated.
#1 Don’t overestimate what you can afford
Before you start touring that perfect mid-century ranch near Burns Park or the cozy condo steps from Zingerman’s, make sure you are pre-approved. Looking at homes outside your budget is like walking into the Jefferson Market hungry. It’s only going to end in heartbreak.
A good rule of thumb is to keep your debt-to-income ratio below 33 percent. If you make $6,000 a month and owe $1,500 in monthly debt, you’re sitting comfortably at 25 percent.
Be honest with yourself about your lifestyle. If weekends in Detroit or dinners on Main Street are part of your routine, make sure your mortgage leaves room for that. You don’t want your mortgage payment to eat your social life.
#2 Don’t get emotionally invested
It’s easy to fall in love with a home, but staying calm when six other offers come in over asking is where the real skill comes in. In Ann Arbor’s market, which still leans toward sellers even though buyers have gained a bit more leverage, it helps to stay objective.
Think of the process like dating. Stay open-minded, watch for red flags, and remember that sometimes the home you thought wasn’t “the one” turns out to be the perfect fit after inspections.
#3 Don’t make any large purchases
This is not the time to upgrade your car or buy furniture for your future living room. Your pre-approval is based on your current financial situation, and large purchases can make your lender nervous.
That new couch can wait until after you close. Besides, no one wants to move a sectional in the snow.
#4 Don’t take out or put in large amount of cash from your bank account
If you start shifting money around like a magician, your lender will notice. Big unexplained deposits or withdrawals can look suspicious, almost like you took out a hidden loan.
If Grandma is helping with your down payment, your lender will want a gift letter stating it doesn’t need to be repaid. If you sold your car or something valuable, keep documentation that shows where the money came from.
#5 Don’t apply for more credit
Avoid opening new credit cards or financing purchases right now. Even store cards that promise discounts can impact your credit and raise questions with your lender. Wait until after closing to open anything new.
#6 Don’t co-sign a loan
Even if it’s for a family member or friend, co-signing a loan adds that debt to your name. If they miss payments, you’re responsible, which could make you ineligible for your own mortgage.
#7 Don’t finance anything
You’ll have plenty of time to buy that perfect dining set once you actually have a dining room to put it in. Financing new items before your mortgage closes can change your credit profile and cause delays.
#8 Don’t switch a job, leave a job or start a company
Lenders value financial stability. Quitting your job or starting a new business before closing can create uncertainty. If you’re planning a career move, wait until after the deal is finalized and the keys are in your hand.
#9 Don’t miss loan payments
This one is simple. Do not miss any loan or credit card payments during the process. Even one missed payment can drop your credit score by over 100 points. Set up autopay or reminders so you don’t lose track while juggling packing and paperwork.
#10 Don’t switch banks
If a promotional offer tempts you to switch banks, hold off until after you close. Lenders usually require at least two months of bank statements from one account. Switching too soon can cause delays or confusion during underwriting.
Final Thoughts
Buying a home in Ann Arbor is a major milestone and a big investment. With average prices hovering around $500,000 and a bit more inventory on the market, buyers finally have a little more negotiating power.
Still, every financial decision counts, especially as we move into the season when furnaces act up and pipes start to freeze. Keep your finances steady, your paperwork organized, and your spending under control.
When you finally unlock the door to your new Ann Arbor home, whether it’s in Water Hill, Kerrytown, or out in Scio Township, it will all be worth it. Then go celebrate with a cozy cup of coffee from RoosRoast and a toast to your new place. You’ve earned it!