Things to Avoid While Buying a New Home
What's better than getting a bunch of new stuff to go in your future home? Not much. But buying big ticket items before closing could be trouble. Until your keys are in hand, there still remain some hurdles to jump. Below you'll find a list of actions to stay away from during this crucial time of your home purchase.
Don't buy big-ticket items. Although you may be planning ways to turn your new house into a showplace, try to stay away from big ticket purchases like appliances, electronics, or furniture. We also recommend that you keep away from vacations and car purchases until your loan closes. Financing new stainless steel appliances with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. It's even a mistake to make those big purchases using cash. Lenders are looking at your cash on hand when considering your loan.
Don't go on a career search. Your recent job history should show consistency. Getting a new job before you apply for a mortgage loan may not affect your approval at all. However, if you switch careers before approval, your process could fail or be slowed down.
Don't move finances around or change banks. Bank statements from the last few months for your accounts (checking, savings, money market, and other assets) will probably be reviewed as the lender considers your loan application. In order to eliminate fraud, lenders want to see clear documentation of how you earn your money and where additional wealth comes from. Changing banks or moving funds to another account - even if its only to pool funds - may hinder the review of your accounts.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. Until the completion of the deal, any good faith deposit actually belongs to you. Although some FSBO sellers may not understand this, any earnest money must be applied to the buyer's closing expenses. We recommend that you put the deposit into a trust account, or get a neutral party, like a lawyer, to hold it until the deal closes. The final disposition of good faith funds, if your home purchase fails, should be included in the purchase agreement with the seller.