Things to Avoid While Buying a New Home
What's more fun than buying a bunch of new furniture to go in your future home? Not much. But making large purchases before closing could be trouble. There are still a few major hurdles to jump before your loan closes. We have listed some actions below you will want to stay away from when waiting for closing.
Don't overspend on big-ticket items You may be tempted to buy that new easy-chair for the soon-to-be-yours living room, but it's advisable to stay away from making large buys like furniture, appliances, jewelry, or cars until closing. Financing new bedroom furniture with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. It's also a red flag to make those big purchases using cash. Lending Institutions are looking at your available cash when considering your loan.
Don't go on a job search. Your recent career history should show consistency. Changing jobs may not jeopardize your ability to qualify for a loan - particularly if you are going to be making more money. However, if you switch careers before you qualify, your process could fail or be stalled.
Don't switch your accounts to a new bank or move around your cash. Bank statements from recent months for all of your accounts (checking, savings, money market, and other assets) will likely be reviewed as the lender considers your approval. The lending institution is looking for a consistent rise and fall of your money each month, in the interest of avoiding fraud. Even for innocent reasons, moving around funds or changing banks could make it more difficult for your lending institution to verify your account history.
Don't give money directly to your seller (usually in cases of "for sale by owner") to be considered earnest money. As a rule, your earnest money belongs to you, not to the seller until the deal closes. Although your seller might not realize this, the good faith money should be applied to your closing expenses. Get a lawyer or other neutral party who can hang on to the money or place it in a trust account until you close. Your purchase agreement should dictate who gets the earnest funds if the home purchase falls through.
1st Credential Mortgage Inc can answer questions about these "Don'ts" and many others. Call us: (281) 778-0805.