Things to Avoid While Buying a New Home
Many new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller accepts their offer and the lender approves the loan. Keep in mind that until you get the keys, your lender is watching your finances very closely. Here are some things to refrain from before closing to assure your transaction goes smoothly.
Don't buy luxury items. Although you will be dreaming of ways to turn your new home into a showplace, avoid major purchases like appliances, electronics, or expensive furnishings. You will also want to avoid vacations and vehicle purchases until the closing of your loan. Using credit cards to buy new living room furniture could compromise your lending process by distorting your numbers. Since lending institutions are examining your bank accounts, a large cash purchase is also not advised.
Don't look for a new job. Stability in your career history is a positive thing to lending institutions. Getting a new career before you apply for a loan may not affect your approval at all. But for some, switching jobs during the mortgage application process might raise concern and hinder your application.
Don't switch banks or move cash around in your bank accounts. As the lending institution considers your mortgage application, you will probably be asked to produce bank statements for recent months on your checking accounts, savings accounts, money market accounts and other liquid assets. In order to eliminate fraud, lenders want to see a consistent portrayal of how you earn your money and where additional money comes from. Even for innocent reasons, transferring funds or changing banks may make it difficult for the lending institution to document your account history.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. Your good faith deposit does not belong to the seller: it remains yours until the transaction is final. Although your FSBO seller might not know this, any good faith money must be used for your closing expenses. It's advisable to put the funds into a trust account, or get an attorney to hold them until the closing of the sale. Should your sale fall through, your purchase agreement should indicate where this good faith funds should go.
1st Credential Mortgage Inc can answer questions about these "Don'ts" and many others. Call us at (281) 778-0805.