Things to Avoid While Purchasing a New Home
What's better than buying a bunch of new furniture to go in your future home? Not much. But buying big ticket items before closing can be harmful. Keep in mind that until closing, your lender is watching your accounts very closely. Here are some actions to avoid during the home buying process to be sure the transaction goes well.
Don't make expensive purchases. Although you will be listing ways to turn your new house into a castle, try to stay away from big ticket purchases like appliances, electronics, or furniture. We also recommend that you avoid vacations and vehicle purchases until your loan closes. Financing your Plasma TVs with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. Because lending institutions are perusing your bank accounts, a large cash purchase is also a bad idea.
Don't look for a new job. Consistency in your career history is a positive thing to banks and other lenders. Getting a new career before you apply for a loan may not affect your approval at all. But for some people, getting a new career during the loan approval process may bring concern and stymie your application.
Don't take your accounts to a new bank or move around your finances. Your lending institution will require you to produce recent bank statements for accounts in your name: savings, checking, money market, and other liquid assets. To detect fraud, lenders look for a clear and consistent picture of how you earn your money and where any additional money comes from. Switching banks or moving funds elsewhere - no matter the purpose - could make it difficult for the lender to document your funds.
Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until the sale is complete, the good faith money remains yours. The earnest money is to be used for your expenses closing; some sellers may not know this. It's advisable to put the funds into a trust account, or get an attorney to hold them until closing. Your contract should indicate who gets the money if the transaction does not go through.
At Affirm Home Loans, we answer questions about this process every day. Call us at (972) 292-0448.