Things to Avoid While Buying a New Home
Some new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller says "yes" and the lender approves the loan. Keep in mind that until closing, your lender is watching your accounts very closely. Here are some things to avoid before closing to be sure the transaction goes smoothly.
Don't buy luxury items. You may be itching to turn your new living room into a home magazine cover, or celebrate your new castle, but keep away from major purchases like furniture, jewelry, appliances, or vacations until your loan closes. You may send up red flags with your lender if you buy your electronics on your credit cards in the middle of your loan process. Using cash to buy expensive items can also create an issue: many lending institutions look at your cash on hand when approving your mortgage loan.
Don't look for a new job. Your recent job history should show stability. Changing jobs may not affect your ability to qualify for a loan - especially if you are getting a better salary. But for some, getting a new career during the mortgage loan approval process may raise concern and hinder your application.
Don't switch banks or move cash around in your bank accounts. Your lender will instruct the submission of recent bank statements of your accounts: savings, checking, money market, and other liquid assets. To eliminate potential fraud, most lending institutions want thorough paperwork to determine the source of all funds. Changing banks or transferring money to another account - no matter the reason - could make it harder for the lender to verify your funds.
Don't give funds directly to your seller (generally in cases of "for sale by owner") for a "good faith" deposit. Your earnest money does not belong to the seller: it remains yours until the sale closes. Although some FSBO sellers may not understand this, any good faith funds should be applied to the buyer's closing expenses. We recommend that you put the deposit into a trust account, or get a neutral party, like a lawyer, to hold it until the deal closes. The final disposition of earnest funds, if your transaction falls through, should be written in the contract with your seller.
Abundance Home Mortgage can answer questions about these "Don'ts" and many others. Give us a call: (512) 335-7800.