Things to Avoid While Buying a Home
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What's better than buying a bunch of new furniture to go in your future home? Not much. But making large purchases before closing could be trouble. It's best to remember that until your keys are in hand, your lender is watching your finances very closely. Here are some actions to avoid during the home buying process to assure the transaction goes smoothly.
Don't make expensive purchases. Although you will be planning ways to turn your new home into a showplace, try to stay away from big ticket purchases like appliances, electronics, or expensive furnishings. You will also want to keep away from vacations and car purchases until your loan closes. Using credit cards to buy furniture could compromise your loan process by distorting your numbers. It's also a red flag to make those big-ticket purchases with cash. Lenders are examining your cash on hand when considering your loan.
Don't look for a new career. Lending Institutions look for a consistent work history on your paperwork. Getting a new job may not affect your ability to qualify for a loan - particularly if you are getting a better salary. However, finding a new career during your approval process may influence whether or not you are approved.
Don't move finances around or switch banks. Bank statements from the last two or three months for your accounts (savings, checking, money market, and other assets) will likely be studied as the lender makes decisions regarding your approval. To eliminate potential fraud, most loans need a thorough paper trail to verify the source of all funds. No matter the purpose, switching banks or transferring money might raise a red flag with the lender and impede your qualification process.
Don't hand over a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Until the sale is complete, the good faith deposit remains yours. A FSBO seller might not know that these good faith funds must go toward your expenses upon closing. Find a lawyer or other neutral person who is able to hang on to the funds or put them in a trust account until closing. Should your sale fall through, your purchase agreement should dictate to whom the earnest money should go.
Not Your Average Lender can answer questions about these "Don'ts" and many others. Call us at 972-203-9033.