Things to Avoid While Purchasing a New Home
With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the mistake of taking their enthusiasm straight to the mall or furniture store. Until the house is really yours, there are still some hurdles to jump. Here are some actions to avoid before closing to be sure the transaction goes smoothly.
Don't throw your money around. You may be itching to buy that new easy-chair for the soon-to-be-yours living room, but it's best to avoid making big ticket purchases like furniture, appliances, jewelry, or cars until closing. Your credit numbers could change suddenly if you purchase new furniture using credit cards. Since lending institutions are reviewing your bank accounts, a large cash purchase is also not advised.
Don't go on a career search. Lenders feel comfortable seeing a consistent work history on your paperwork. Getting a new career before you apply for a loan may not compromise your approval at all. However, if you switch careers before your loan is approved, your mortgage process could fail or be stalled.
Don't switch your accounts to a new bank or move around your money. As your lending institution considers your mortgage package, you will likely be instructed to produce bank statements for the last two or three months for your checking accounts, savings accounts, money market funds and other liquid wealth. The lending institution wants to see a steady rise and fall of your money each pay period, in order to avoid fraud. Changing banks or transferring finances elsewhere - for whatever reason - might hinder the review of your funds.
Don't give cash directly to your seller (generally in cases of "for sale by owner") to be used as a "good faith" deposit. Your good faith deposit does not belong to the seller: it is actually yours until the sale closes. Although your FSBO seller may not understand this, any good faith funds must be used for the buyer's closing expenses. Get a lawyer or other neutral person who is able to hold the funds or put them in a trust account until closing. The disposition of earnest funds, in the case of a failed transaction, should be included in the contract with your seller.
Mario Vega can answer questions about these "Don'ts" and many others. Give us a call: 877-310-6200.
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