Things to Avoid While Purchasing a New Home
Many new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller accepts their offer and the lender approves their loan. Keep in mind that until you get the keys, your lender is watching your accounts very closely. Here are some things to stay clear of before closing to be sure the transaction goes well.
Don't overspend on big-ticket items Although you may be dreaming of ways to turn your new house into a castle, try to stay away from big ticket purchases like appliances, electronics, or expensive furnishings. You will also want to stay away from vacations and car purchases until your loan closes. Using credit cards to buy furniture could jeopardize your lending process by distorting your numbers. It's even a red flag to make those big-ticket purchases using cash. Lenders are examining your available cash when considering your loan.
Don't go on a career search. Your recent career history should show stability. Finding a new job (particularly one with a bigger paycheck) may not affect your ability to qualify for your mortgage loan. However, if you switch careers before your loan is approved, your loan process could fail or be stalled.
Don't switch your accounts to a new bank or move around your money. As the lender considers your loan application, you will likely be asked to provide bank statements for the last two or three months on your saving and checking accounts, money market accounts and other liquid assets. To eliminate fraud, lenders need clear documentation of how you earn your living and where additional wealth comes from. No matter the reason, switching banks or moving money from one account to another may raise a red flag with your lender and impede your loan process.
Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. Your good faith deposit does not belong to the seller: it remains yours until closing. Although your seller might not understand this, any earnest money should be used for your closing expenses. A neutral party, like an attorney can hang onto your deposit, or you may put it temporarily into a trust account until you close. The contract should indicate to whom the funds go if the transaction falls through.
At Tier One Mortgage, LLC, we answer questions about this process every day. Call us: (585) 282-0960.