Things to Avoid While Purchasing a New Home
With the thrill that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of taking their enthusiasm straight to the mall or furniture store. Until closing, there are still some hoops to jump through. Below you'll find a list of actions to stay away from during this critical time of your home purchase.
Don't throw your money around. Although you will be planning ways to turn your new house into a showplace, avoid major purchases like appliances, electronics, or expensive furnishings. You will also want to avoid vacations and vehicle purchases until the closing of your loan. Financing new stainless steel appliances with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. It's even a red flag to make those big purchases using cash. Lending Institutions are looking at your cash on hand when considering your loan.
Don't go on a career search. Lenders look for a consistent work history on your application. Finding a new career (particularly one with a better salary) may not affect your ability to qualify for your mortgage. However, if you switch careers before you qualify, your process could fail or be stalled.
Don't switch banks or move money around in your accounts. Bank statements from the last two or three months for all of your accounts (savings, checking, money market, and others) will likely be analyzed as the lender considers your loan application. In order to eliminate fraud, lenders require clear documentation of how you earn your money and where any additional money comes from. Switching banks or moving funds elsewhere - for whatever purpose - could hinder the review of your accounts.
Don't give money directly to your seller (usually in cases of "for sale by owner") for a "good faith" deposit. Until closing, the good faith deposit remains yours. Some sellers may not know that the good faith money must go toward your expenses upon closing. Find an attorney or other neutral party who can hang on to the funds or place them in a trust account until closing. Should your sale fall through, the contract with the seller should specify where this good faith deposit should go.
At Sublime Financial, we answer questions about this process every day. Give us a call at 9722920448.