Things to Avoid While Buying a New Home
What's more fun than getting a bunch of new stuff to adorn your future home? Nothing. But making big ticket purchases before your loan closes can be harmful. Until the keys are handed over, there still remain some hoops to jump through. Below you'll find a list of things to stay away from during this crucial time of your home purchase.
Don't overspend on big-ticket items Although you may be dreaming of ways to turn your new home into a showplace, try to stay away from major purchases like appliances, electronics, or expensive furnishings. You will also want to stay away from vacations and car purchases until the closing of your loan. Using credit cards to buy furniture could jeopardize your lending process by distorting your numbers. It's even a bad idea to make those large purchases with cash. Lending Institutions are examining your cash reserve when considering your loan.
Don't look for a new career. Your recent job history should show stability. Finding a new career (particularly one with a better salary) may not hinder your ability to qualify for your mortgage. However, if you switch careers before approval, your mortgage process could fail or be bogged down.
Don't move money around or switch banks. Bank statements from recent months for accounts in your name (checking, savings, money market, and others) will likely be analyzed as the lending institution considers your mortgage application. To eliminate potential fraud, most loans need thorough paperwork to verify the source of all funds. Switching banks or moving funds to another account - for whatever reason - might make it harder for the lender to review your funds.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. Until closing, any good faith deposit remains yours. Some sellers may not realize that this earnest money is to be applied to your expenses at closing. An attorney or other type of neutral party can hold onto your deposit, or you may put it temporarily into a trust account until closing. The disposition of good faith funds, in the case of a failed transaction, should be specified in the purchase agreement with your seller.
At Tier One Mortgage, LLC, we answer questions about this process every day. Give us a call at (585) 282-0960.