Don't Trip Yourself up While Buying a New Home
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Some 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. There are still a few major hurdles to jump before the keys are handed over. Below you'll find a list of actions to avoid during this crucial time of your home purchase.
Don't buy luxury items. You may be itching to turn your new living room into a showplace, or celebrate your new dream home, but stay away from major purchases like furniture, cars, appliances, or vacations until closing. Your credit numbers could change suddenly if you purchase new furniture using plastic. It's even a mistake to make those large purchases using cash. Lending Institutions are looking at your cash on hand when considering your loan.
Don't go job hunting. Your recent job history should show stability. Finding a new career (especially one with a bigger paycheck) may not hinder your ability to qualify for your loan. However, if you switch careers before approval, your loan process could fail or be slowed down.
Don't switch your accounts to a new bank or move around your finances. Bank statements from recent months for accounts in your name (checking, savings, money market, and others) will probably be studied as the lending institution considers your application. The lending institution is looking for a consistent rise and fall of your funds each pay period, in order to avoid fraud. Changing banks or moving finances to another account - even if its merely to pool funds - might make it difficult for your lender to review your funds.
Don't give cash directly to your seller (usually in the case of of "for sale by owner") to be used as earnest money. As a rule, your good faith deposit belongs to you, not the seller until the sale is final. Your FSBO seller might not realize that these good faith funds must go toward your expenses upon closing. Find an attorney or other neutral party who will hold the funds or put them in a trust account until you close. The disposition of good faith money, if your home purchase fails, should be specified in the contract with the seller.
At Metro Mortgage, we answer questions about this process every day. Give us a call at 866-300-1550.