Things to Avoid While Buying a New Home
What's better than buying a bunch of new stuff to adorn your future home? Not much. But making big purchases before closing can be an error. There still remain a few major hurdles to jump before closing. We have listed some actions below you will want to avoid when waiting for your loan to close.
Don't empty your wallet on big-ticket items Although you will be listing ways to turn your new house into a castle, avoid big ticket purchases like appliances, electronics, or furniture. You will also want to stay away from vacations and car purchases until your loan closes. Financing new furniture with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. Using cash to buy expensive items can even create a bad idea: many banks take into consideration your available cash when approving your mortgage loan.
Don't get a new career. Stability in your work history is a good thing to lending institutions. Finding a new job (particularly one with a bigger salary) may not jeopardize your ability to qualify for a mortgage. However, if you switch careers before your loan is approved, your loan process could fail or be stalled.
Don't move money around or change banks. Your lending institution will require you to submit recent bank statements for accounts in your name: checking, savings, money market, and other assets. In order to detect fraud, lenders look for clear documentation of how you earn your money and where any additional money comes from. No matter the purpose, changing banks or transferring funds might raise a red flag with the lender and slow down your application process.
Don't give money directly to your seller (commonly in the case of of "for sale by owner") to be considered a "good faith" deposit. Until closing, the good faith deposit remains yours. Although your FSBO seller might not understand this, the good faith funds must be used for the buyer's closing expenses. We recommend that you put the deposit into a trust account, or get an attorney to hold it until closing. The final disposition of good faith funds, in the case of a failed transaction, should be indicated in the purchase agreement with your seller.
BeneGroup, Inc. can answer questions about these "Don'ts" and many others. Give us a call at 4083956018.