Don't Trip Yourself up While Buying your New Home
Many new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller says "yes" and the loan is approved. Until your loan closes, there are still 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 empty your wallet on big-ticket items It may be tempting to buy that new Turkish rug for the soon-to-be-yours living room, but it's best to stay away from 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. Using cash to buy expensive items can also be an issue: most lending institutions take into consideration your cash reserve when approving your mortgage loan.
Don't look for a new career. Your recent work history should show consistency. Getting a new career before you start the application process for a loan may not affect your approval at all. But for some people, switching jobs during the mortgage approval process could bring concern and hinder your approval.
Don't move finances around or switch banks. Most lenders will ask for recent bank statements of all of your accounts: savings, checking, money market, and other assets. To detect potential fraud, most loans need thorough paperwork to determine the source of all funds. Changing banks or moving money elsewhere - for whatever reason - might hinder the documentation of your accounts.
Don't give funds directly to your seller (commonly in cases of "for sale by owner") to be considered earnest money. Your good faith deposit does not belong to the seller: it remains yours until the sale closes. Although your FSBO seller may not understand this, your good faith money should go toward the buyer's closing expenses. An attorney or other type of neutral party can hold your earnest funds, or you may put them temporarily into a trust account until you close. The purchase agreement should specify who keeps the deposit if the transaction does not go through.
Back Bay Funding can answer questions about these "Don'ts" and many others. Give us a call: (800) 299-0270.