Things to Avoid While Buying a New Home
Some new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller accepts their offer and the lender approves the loan. Keep in mind that until closing, your lender is watching your finances very closely. We have given you a list of actions below we suggest you avoid when waiting for closing.
Don't make expensive purchases. Although you will be dreaming of ways to turn your new home into a castle, avoid big ticket purchases like appliances, electronics, or expensive furnishings. We also recommend that you stay away from vacations and car purchases until your loan closes. Your credit numbers could be altered suddenly if you make a huge purchase using credit cards. Because lending institutions are reviewing your financial accounts, a large cash purchase is also a mistake.
Don't go on a job search. Lenders like to see a consistent job history on your application. Getting a new career before you apply for a loan may not compromise your approval at all. However, if you switch careers before you qualify, your loan process could fail or be stalled.
Don't switch your accounts to a new bank or move around your money. Bank statements from the last few months for your accounts (checking, savings, money market, and other assets) will likely be reviewed as the lender considers your mortgage application. To detect potential fraud, most lenders want detailed paperwork to determine the source of all funds. Switching banks or moving funds elsewhere - no matter the reason - may make it harder for the lender to verify your funds.
Don't hand over a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith money belongs to you, not to the seller up until the sale is final. The earnest funds are to be applied to your expenses closing; some FSBO sellers might not understand this. Get an attorney or other neutral person who will hold the funds or place them in a trust account until closing. Should your home purchase fail, the purchase agreement should document where the earnest money should go.
At Coastal Mortgage Corp., we answer questions about this process every day. Give us a call at 504-866-5626.
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