Things to Avoid While Buying 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. There still remain a few major hurdles to jump before closing. We have listed some actions below you will want to avoid when waiting for closing.
Don't throw your money around. You may be itching to turn your new kitchen into a showplace, or celebrate your new castle, but stay away from major purchases like furniture, jewelry, appliances, or vacations until closing. Your lender may send up red flags if you finance new electronics on your credit cards in the middle of your loan process. It's even a mistake to make those big purchases with cash. Lending Institutions are looking at your cash on hand when considering your loan.
Don't look for a new career. Your recent job history should show consistency. Getting a new job before you apply for a mortgage may not compromise your approval at all. However, if you switch careers before your loan is approved, your mortgage process could fail or be slowed down.
Don't move cash around or switch banks. Most lenders will ask for recent bank statements of all of your accounts: checking, savings, money market, and other liquid assets. To eliminate potential fraud, most loans want a detailed paper trail to document the source of all cash. No matter the reason, moving banks or moving funds from one account to another could raise a red flag with your lender and impede your application process.
Don't give funds directly to your seller (usually in cases of "for sale by owner") to be used as earnest money. As a rule, your good faith deposit belongs to you, not the seller up until the sale is final. Although your FSBO seller might not understand this, your earnest money must be applied to your closing expenses. Get an attorney or other neutral person who is able to hang on to the money or put it in a trust account until you close. The disposition of good faith funds, if your transaction fails, should be specified in the contract with your seller.
At Crown Mortgage, we answer questions about this process every day. Give us a call: (434) 975-5626.
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