Don't Trip Yourself up While Buying your New Home
With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the mistake of carrying their enthusiasm straight to the mall or furniture store. Keep in mind that until you get the keys, your lender is watching your finances very closely. Below you'll find a list of actions to avoid during this critical time of your home purchase.
Don't buy big-ticket items. You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new dream home, but stay away from major purchases like furniture, jewelry, appliances, or vacations until closing. Your credit numbers could be altered suddenly if you purchase new furniture using credit cards. Using cash to buy expensive items can also create an issue: many banks take into consideration your cash reserve when approving your mortgage.
Don't get a new career. Stability in your career history is a positive thing to lending institutions. Getting a new career before you apply for a mortgage loan may not jeopardize your approval at all. However, switching jobs in the middle of the loan process might affect whether or not you are approved.
Don't move finances around or switch banks. Bank statements from the last few months for accounts in your name (checking, savings, money market, and other assets) will be studied as the lender makes decisions regarding your approval. To detect potential fraud, most lenders want thorough paperwork to document the source of all cash. Even for innocent reasons, moving around money or switching banks may make it harder for the lending institution to confirm your bank history.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. As a rule, your good faith deposit belongs to you, not to the seller up until the deal closes. Any good faith funds are to be used for your expenses upon closing; some individual sellers might not know this. It's advisable to put the funds into a trust account, or get an attorney to hold them until closing. If your sale falls through, your purchase agreement should specify where the good faith funds should go.
At Abundance Home Mortgage, we answer questions about this process every day. Give us a call at (512) 335-7800.