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 mistake of taking their enthusiasm straight to the mall or appliance store. Until the keys are handed over, there still remain some hurdles to jump. Below you'll find a list of things to stay away from during this crucial time of your home purchase.
Don't buy big-ticket items. You may be itching to turn your new living room into a showplace, or celebrate your new dream home, but stay away from major purchases like furniture, jewelry, appliances, or vacations until your loan closes. Using plastic to buy new living room furniture could jeopardize your loan process by distorting your numbers. It's also a bad idea to make those large purchases with cash. Lending Institutions are looking at your cash on hand when considering your loan.
Don't get a new job. Consistency in your work history is a positive thing to lenders. Changing jobs may not compromise your ability to qualify for a mortgage loan - particularly if you are getting a bigger paycheck. However, if you switch careers before approval, your loan process could fail or be stalled.
Don't switch banks or move finances around in your accounts. As the lending institution reviews your mortgage package, you will likely be asked to submit bank statements for the last two or three months on your checking accounts, savings accounts, money market funds and other liquid wealth. To avoid fraud, lenders need a consistent portrayal of how you earn your money and where additional wealth comes from. Even for practical purposes, moving around money or changing banks could make it more difficult for your lender to confirm your account history.
Don't deliver a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Until closing, the good faith money actually belongs to you. Some sellers might not know that any earnest money must be applied to your expenses upon closing. An attorney or other type of neutral party can hang onto your earnest money, or you may put it temporarily into a trust account until closing. If your home purchase fails, your contract with the seller should indicate where the earnest money should go.
Tenby J. Dahman can answer questions about these "Don'ts" and many others. Give us a call at 3038627760.