Things to Avoid While Purchasing a New Home
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the error of taking their enthusiasm straight to the mall or furniture store. Keep in mind that until your keys are in hand, your lender is watching you very closely. Below you'll find a list of actions to avoid during this critical time of your home purchase.
Don't empty your wallet on big-ticket items It may be tempting to buy that new Turkish rug for the soon-to-be-yours parlor, but it's advisable to stay away from making large purchases like furniture, appliances, jewelry, or cars until closing. Your credit numbers could be altered suddenly if you purchase new furniture using credit cards. Since lenders are reviewing your bank accounts, a large cash purchase is also a bad idea.
Don't get a new job. Your recent career history should show consistency. Getting a new career before you apply for a loan may not jeopardize your approval at all. But in some cases, changing careers during the mortgage application process might bring concern and affect your approval.
Don't move cash around or switch banks. As the lending institution considers your loan application, you will probably be instructed to produce bank statements for the last few months for your checking accounts, savings accounts, money market accounts and other liquid assets. Your lender looks for a consistent flow of your money over the month, in order to rule out fraud. No matter the reason, switching banks or transferring funds might raise a red flag with the lender and impede your application process.
Don't give money directly to your seller (generally in the case of of "for sale by owner") for a "good faith" deposit. Until the sale is complete, the earnest money actually belongs to you. Although your seller might not understand this, your earnest money must be used for your closing expenses. A neutral party, like an attorney can hold onto your deposit, or you may put it temporarily into a trust account until you close. The final disposition of earnest funds, if your home purchase falls through, should be documented in the purchase agreement with the seller.
At 1st Credential Mortgage Inc, we answer questions about this process every day. Give us a call at (281) 778-0805.