Things to Avoid While Buying a Home
Some new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller says "yes" and the loan is approved. Until the house is really yours, there are still some hoops to jump through. Below you'll find a list of things to avoid during this critical time of your home purchase.
Don't overspend on big-ticket items Although you may be planning ways to turn your new house into a showplace, try to stay away from major purchases like appliances, electronics, or furniture. We also recommend that you stay away from vacations and vehicle purchases until your loan closes. Using plastic to buy furniture could compromise your lending process by altering your numbers dramatically. Using cash to buy expensive items can even create an issue: many banks consider your cash reserve when approving your application.
Don't go on a career search. Stability in your job history is a positive thing to lenders. Finding a new job (especially one with a bigger salary) may not change your ability to qualify for your mortgage. However, getting a new job in the middle of your approval process may affect your approval.
Don't move money around or switch banks. As the lending institution considers your mortgage loan application, you will likely be asked to produce bank statements for recent months on your saving and checking accounts, money market accounts and other liquid wealth. To avoid potential fraud, most lending institutions require a thorough paper trail to determine the source of all funds. No matter the reason, moving banks or moving money from one account to another may raise a red flag with your lender and slow down your qualification process.
Don't give funds directly to your seller (usually in the case of of "for sale by owner") for a "good faith" deposit. Your earnest money does not belong to the seller: it remains yours until closing. Although your seller might not understand this, the earnest money should be used for your closing expenses. Find a lawyer or other neutral person who can hold the money or put it in a trust account until closing. Your purchase agreement should indicate who gets the earnest funds if the transaction falls through.
At Tier One Mortgage, LLC, we answer questions about this process every day. Give us a call: (585) 282-0960.