Don't Trip Yourself up While Buying a Home
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Lots of new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller accepts their offer and the lender approves the loan. It's wise to remember that until you get the keys, your lender is watching you very closely. Below you'll find a list of things to stay away from during this critical time of your home purchase.
Don't make expensive purchases. It may be tempting to buy that new sofa for the soon-to-be-yours family room, but it's advisable to stay away from making big ticket buys like furniture, appliances, jewelry, or vacations until closing. Financing new stainless steel appliances with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. It's even a mistake to make those huge purchases using cash. Lenders are looking at your cash on hand when considering your loan.
Don't go on a career search. Lenders like to see a consistent job history on your paperwork. Getting a new career before you apply for a mortgage may not jeopardize your approval at all. However, switching jobs during your loan process may influence whether or not you are approved.
Don't switch your accounts to a new bank or move around your finances. Most lenders will require you to produce recent bank statements for accounts in your name: savings, checking, money market, and other assets. Your lender looks for a consistent flow of your funds over the pay period, in the interest of avoiding fraud. Switching banks or moving finances to another account - for whatever reason - may make it harder for your lender to verify your funds.
Don't give funds directly to your seller (usually in the case of of "for sale by owner") to be used as earnest money. Your good faith money does not belong to the seller: it is actually yours until the transaction is final. The FSBO seller may not know that any good faith funds is to be applied to your expenses at closing. We recommend that you put the money into a trust account, or get a neutral party, like a lawyer, to hold it until the deal closes. If your home purchase fails, your contract with the seller should specify to whom your earnest money should go.
First Equity can answer questions about these "Don'ts" and many others. Give us a call!