Things to Avoid While Buying a New Home
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the error of taking their enthusiasm straight to the mall or furniture store. Until the house is really yours, there still remain some hoops to jump through. Below you'll find a list of actions to stay away from during this crucial time of your home purchase.
Don't throw your money around. You may be itching to turn your new kitchen into a showplace, or celebrate your new dream home, but keep away from major purchases like furniture, jewelry, appliances, or vacations until closing. Using credit cards to buy furniture could jeopardize your lending process by changing your numbers dramatically. Since lenders are examining your financial accounts, a large cash purchase is also a bad idea.
Don't go on a career search. Lenders feel comfortable seeing a consistent work history on your application. Finding a new career (particularly one with a bump in salary) may not affect your ability to qualify for a mortgage. However, switching careers during the approval process may affect whether or not you are approved.
Don't take your accounts to a new bank or move around your finances. Bank statements from the last two or three months for all of your accounts (savings, checking, money market, and other assets) will probably be reviewed as the lending institution makes decisions regarding your loan application. In order to detect fraud, lenders want to see a consistent portrayal of how you earn your living and where any additional money comes from. No matter the purpose, moving banks or transferring funds could raise a red flag with your lender and slow your qualification process.
Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your earnest money does not belong to the seller: it remains yours until closing. Although some individual sellers may not understand this, your good faith funds must go toward your closing expenses. A neutral party, like an attorney can hold your deposit, or you may put it temporarily into a trust account until closing. Should your sale fall through, the contract with the seller should document where your good faith funds should go.
At American Mortgage Advisers, Inc, we answer questions about this process every day. Call us: 214-865-7442.
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