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. It's wise to remember that until your keys are in hand, your lender is watching your finances very closely. Below you'll find a list of actions to avoid during this crucial time of your home purchase.
Don't overspend on big-ticket items Although you will be dreaming of ways to turn your new home into a castle, try to stay away from major purchases like appliances, electronics, or furniture. You will also want to avoid vacations and car purchases until the closing of your loan. Your credit numbers could be altered suddenly if you purchase new furniture using plastic. It's even a bad idea to make those large purchases with cash. Lending Institutions are examining your cash on hand when considering your loan.
Don't get a new job. Your recent work history should show consistency. Finding a new job (particularly one with a bigger paycheck) may not change your ability to qualify for a loan. However, switching jobs in the middle of your approval process may affect whether or not you are approved.
Don't change banks or move finances around in your accounts. Your lending institution will ask for recent bank statements on all of your accounts: savings, checking, money market, and other liquid assets. To avoid potential fraud, most lenders need thorough paperwork to determine the source of all incoming funds. Switching banks or moving finances elsewhere - for whatever purpose - might make it harder for the lender to verify your funds.
Don't deliver earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until closing, any earnest money remains yours. The earnest funds are to go toward your expenses closing; some sellers may not realize this. We recommend that you put the funds into a trust account, or get an attorney to hold them until closing. The final disposition of earnest funds, in the case of a failed transaction, should be specified in the purchase agreement with your seller.
Tenby J. Dahman can answer questions about these "Don'ts" and many others. Give us a call at 3038627760.