Things to Avoid While Purchasing a New Home
Many new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller accepts their offer and the loan is approved. Keep in mind that until you get the keys, your lender is watching you very closely. Below you'll find a list of things to avoid during this crucial time of your home purchase.
Don't overspend on big-ticket items You may be itching 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. You may send up red flags with your lender if you buy new electronics on your credit cards during your loan process. It's also a bad idea to make those huge purchases with cash. Lenders are examining your available cash when considering your loan.
Don't look for a new job. Consistency in your work history is a positive thing to banks and other lenders. Finding a new career (particularly one with a better paycheck) may not jeopardize your ability to qualify for a mortgage loan. However, if you switch careers before your loan is approved, your mortgage process could fail or be bogged down.
Don't move cash around or switch banks. Bank statements from the last two or three months for your accounts (checking, savings, money market, and others) will probably be studied as the lender makes decisions regarding your mortgage application. To avoid potential fraud, most loans need a thorough paper trail to determine the source of all incoming funds. Even for practical purposes, transferring cash or changing banks may make it harder for your lending institution to confirm your account history.
Don't give a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Until the completion of the deal, the earnest money actually belongs to you. Although some FSBO sellers may not know this, any earnest money should be used for your closing expenses. We recommend that you put the funds into a trust account, or get a neutral party, like an attorney to hold them until the closing of the sale. The disposition of good faith money, if your home purchase falls through, should be specified in the purchase agreement with your seller.
Crown Mortgage can answer questions about these "Don'ts" and many others. Call us at (434) 975-5626.
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