Things to Avoid While Purchasing a New Home
With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the mistake of taking their enthusiasm straight to the mall or furniture store. There still remain a few major hurdles to jump before your loan closes. Below you'll find a list of things to stay away from during this crucial time of your home purchase.
Don't buy big-ticket items. Although you may be listing ways to turn your new house into a showplace, try to stay away from big ticket purchases like appliances, electronics, or furniture. We also recommend that you stay away from vacations and vehicle purchases until the closing of your loan. Using credit cards to buy furniture could compromise your lending process by altering your numbers dramatically. Because lenders are perusing your financial accounts, a large cash purchase is also not advised.
Don't look for a new career. Lenders feel comfortable seeing a consistent career history on your application forms. Finding a new job (especially one with a bigger paycheck) may not hinder your ability to qualify for your mortgage loan. However, switching careers during your loan process may affect your approval.
Don't switch banks or move money around in your bank accounts. As the lender considers your loan application, you will likely be instructed to provide bank statements for the last two or three months for your saving and checking accounts, money market funds, and other liquid wealth. To detect potential fraud, most loans want a thorough paper trail to document the source of all funds. No matter the reason, changing banks or moving funds from one account to another may raise a red flag with the lender and slow your loan process.
Don't hand over a "good faith" deposit directly to the seller in an FSBO (for sale by owner) purchase. As a rule, your earnest money is yours, not the sellers until closing. Although some individual sellers may not realize this, any good faith money must be applied to the buyer's closing expenses. We recommend that you put the money into a trust account, or get an attorney to hold it until the closing of the sale. Should your home purchase fail, the purchase agreement should document to whom this earnest money should go.