Don't Trip Yourself up While Buying your Home
Many new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller says "yes" and the loan is approved. It's best to remember that until closing, your lender is watching you very closely. Here are some things to avoid during the home buying process to assure your transaction goes smoothly.
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 vehicle purchases until your loan closes. Financing your 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. Since lenders are examining your financial accounts, a large cash purchase is also not advised.
Don't get a new career. Your recent work history should show stability. Getting a new career before you apply for a loan may not jeopardize your approval at all. However, if you switch careers before approval, your mortgage process could fail or be stalled.
Don't move cash around or switch banks. Your lender will instruct the submission of recent bank statements on your accounts: savings, checking, money market, and other liquid assets. Your lending institution looks for a consistent rise and fall of your funds over the month, in order to rule out fraud. No matter the purpose, switching banks or moving money from one account to another may raise a red flag with your lender and impede your qualification process.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. As a rule, your earnest money belongs to you, not to the seller until the deal closes. Although your seller might not realize this, any good faith funds should go toward your closing expenses. Find an attorney or other neutral party who will hang on to the funds or place them in a trust account until you close. The contract should indicate to whom the funds go if the transaction does not go through.