Don't Trip Yourself up While Buying a New Home
Some new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller says "yes" and the loan is approved. There still remain a few major hurdles to jump before closing. We have listed some things below you will want to avoid when waiting for closing.
Don't empty your wallet on big-ticket items It may be tempting to order that new easy-chair for the soon-to-be-yours parlor, but it's advisable to avoid making major purchases like furniture, appliances, electronic equipment, or vacations until your home loan closes. You may send up red flags with your lender if you finance your appliances on your credit cards in the middle of your loan process. Using cash to purchase big items can even be a mistake: most banks take into consideration your cash reserve when approving your mortgage loan.
Don't look for a new career. Consistency in your job history is a good thing to banks and other lenders. Finding a new career (particularly one with a better salary) may not hinder your ability to qualify for your loan. However, switching careers during your loan process could affect your approval.
Don't take your accounts to a new bank or move around your finances. As your lender considers your mortgage loan application, you will likely be required to submit bank statements for the last few months on your checking and savings accounts, money market accounts and other liquid wealth. Your lender looks for a steady rise and fall of your money over the month, in order to rule out fraud. No matter the reason, changing banks or moving money from one account to another can raise a red flag with your lender and slow down your qualification process.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. Your good faith money does not belong to the seller: it is actually yours until the sale closes. The good faith funds are to go toward your expenses closing; some individual sellers might not realize this. We recommend that you put the funds into a trust account, or get an attorney to hold them until the deal closes. The final disposition of earnest funds, if your home purchase falls through, should be documented in the purchase agreement with the seller.