Things to Avoid While Buying a New Home
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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 loan is approved. It's best to remember that until you get the keys, your lender is watching your accounts very closely. 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 You may be tempted to buy that new Turkish rug for the soon-to-be-yours den, but it's best to stay away from making large buys like furniture, appliances, jewelry, or vacations until your home loan closes. Financing your bedroom furniture with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. It's even a bad idea to make those large purchases using cash. Lending Institutions are examining your available cash when considering your loan.
Don't go on a job search. Your recent career history should show consistency. Getting a new job may not compromise your ability to qualify for a loan - especially if you are getting a better salary. However, switching careers during your approval process may influence whether or not you are approved.
Don't take your accounts to a new bank or move around your finances. Most lenders will ask for recent bank statements on your accounts: savings, checking, money market, and other liquid assets. Your lender looks for a steady rise and fall of your money each month, in order to rule out fraud. Even for innocent purposes, transferring cash or changing banks might make it harder for your lending institution to confirm your bank history.
Don't give a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Your good faith money does not belong to the seller: it is actually yours until the sale closes. Although your FSBO seller might not understand this, the good faith money should be used for the buyer's closing expenses. A neutral party, like an attorney can hang onto your earnest money, or you may put it temporarily into a trust account until you close. Your purchase agreement should indicate who gets the money if the home purchase falls through.
At Dream Home Funding, we answer questions about this process every day. Call us: (325) 651-2100.