Things to Avoid While Buying a New Home
Some new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller accepts their offer and the lender approves their loan. It's wise to remember that until closing, your lender is watching your accounts very closely. Below you'll find a list of actions to avoid during this crucial time of your home purchase.
Don't buy luxury items. You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new castle, but keep away from big purchases like furniture, cars, appliances, or vacations until the loan closes. Your lender may send up red flags if you purchase your appliances on your credit cards during your loan process. It's even a bad idea to make those huge purchases using cash. Lending Institutions are looking at your available cash when considering your loan.
Don't get a new career. Consistency in your work history is a positive thing to lenders. Getting a new job may not jeopardize your ability to qualify for a mortgage loan - especially if you are improving your salary. However, if you switch careers before you qualify, your mortgage process could fail or be stalled.
Don't switch your accounts to a new bank or move around your cash. Your lending institution will instruct the submission of recent bank statements of all of your accounts: checking, savings, money market, and other liquid assets. In order to detect fraud, lenders need a clear and consistent picture of how you earn your living and where any additional wealth comes from. Even for innocent reasons, transferring cash or changing banks could make it more difficult for the lending institution to verify your account history.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, delivered to his door. As a rule, your good faith deposit belongs to you, not to the seller up until closing. The good faith funds are to go toward your expenses closing; a FSBO seller may not understand this. A neutral party, like an attorney can hold onto your funds, or you may place them temporarily into a trust account until you close. The contract should specify where the money goes if the transaction falls through.
Back Bay Funding can answer questions about these "Don'ts" and many others. Give us a call: (800) 299-0270.