Things to Avoid While Buying a New Home
What's more fun than buying a bunch of new furnishings to go in your future home? Not much. But buying big ticket items before closing could be trouble. Until the house is really yours, there still remain some hoops to jump through. Below you'll find a list of things to avoid during this critical time of your home purchase.
Don't throw your money around. It may be tempting to order that new easy-chair for the soon-to-be-yours den, but it's advisable to avoid making big ticket purchases like furniture, appliances, jewelry, or cars until closing. Financing new bedroom furniture with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. Using cash to purchase expensive items can even be a problem: most lenders take into consideration your cash reserve when approving your mortgage loan.
Don't get a new career. Your recent career history should show stability. Getting a new career before you apply for a mortgage may not get in the way of your approval at all. However, switching careers in the middle of the application process might influence whether or not you are approved.
Don't switch your accounts to a new bank or move around your finances. Most lenders will ask for recent bank statements for accounts in your name: checking, savings, money market, and other liquid assets. The lender needs to see a steady rise and fall of your money each pay period, in order to avoid fraud. Even for innocent reasons, transferring finances or switching banks could make it harder for the lender to document your account history.
Don't deliver a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Until closing, the good faith money actually belongs to you. Some FSBO sellers might not realize that any good faith funds should go toward your expenses upon closing. Find a lawyer or other neutral party who is able to hang on to the deposit or put it in a trust account until you close. The disposition of good faith money, if your home purchase fails, should be specified in the contract with your seller.
At Pacific Loan Brokers, we answer questions about this process every day. Call us at 877-310-6200.
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