Things to Avoid While Purchasing a New Home
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of taking their enthusiasm straight to the mall or furniture store. There are still a few major hurdles to jump before your loan closes. Here are some things to stay clear of before closing to assure the transaction goes smoothly.
Don't empty your wallet on big-ticket items You may be itching to turn your new living room into a home magazine cover, or celebrate your new castle, but keep away from expensive purchases like furniture, jewelry, appliances, or vacations until closing. Your lender may send up red flags if you purchase new furniture on your credit cards during your loan process. It's even a red flag to make those big-ticket purchases with cash. Lending Institutions are looking at your cash reserve when considering your loan.
Don't go on a job search. Lenders like to see a consistent work history on your application. Finding a new career (especially one with a bump in salary) may not jeopardize your ability to qualify for your loan. However, switching careers during the approval process may affect whether or not you are approved.
Don't move cash around or change banks. Your lending institution will instruct the submission of recent bank statements for accounts in your name: savings, checking, money market, and other liquid assets. Your lending institution looks for a steady rise and fall of your funds over the month, in the interest of ruling out fraud. Even for practical reasons, moving around funds or switching banks might make it more difficult for the lending institution to verify your bank history.
Don't give cash directly to your seller (commonly in cases of "for sale by owner") for earnest money. As a rule, your good faith money belongs to you, not to the seller up until closing. Some sellers might not know that the good faith funds must be used for your expenses upon closing. You'll need to put the deposit into a trust account, or get a neutral party, like a lawyer, to hold it until the closing of the sale. The disposition of earnest funds, in the case of a failed transaction, should be included in the contract with your seller.
REDDISH BULL FINANCE, INC. | NMLS #1247892 can answer questions about these "Don'ts" and many others. Give us a call: 561-475-2281.