Things to Avoid While Buying a New Home
Many new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller accepts their offer and the loan is approved. It's best to remember that until your keys are in hand, your lender is watching you very closely. Here are some actions to refrain from during the home buying process to be sure your transaction goes smoothly.
Don't buy big-ticket items. You may be itching to order that new couch for the soon-to-be-yours den, but it's best to stay away from making big ticket purchases like furniture, appliances, electronic equipment, or vacations until closing. Financing new furniture with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. It's even a red flag to make those big-ticket purchases with cash. Lending Institutions are looking at your available cash when considering your loan.
Don't look for a new job. Your recent career history should show stability. Getting a new job may not compromise your ability to qualify for a mortgage loan - particularly if you are going to be making more money. But for some, getting a new career during the mortgage approval process could bring concern and affect your application.
Don't switch banks or move money around in your bank accounts. Bank statements from the last two or three months for accounts in your name (savings, checking, money market, and others) will probably be studied as the lender considers your loan application. To detect fraud, lenders will need a clear and consistent picture of how you earn your money and where additional funds come from. Even for practical reasons, moving around finances or switching banks may make it more difficult for your lender to verify your account history.
Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until closing, any good faith deposit remains yours. Any good faith funds are to be used for your expenses upon closing; some FSBO sellers might not know this. It's advisable to put the deposit into a trust account, or get a neutral party, like an attorney, to hold it until the closing of the sale. Your purchase contract should indicate who keeps the earnest funds if the home purchase falls through.
Coastal Mortgage Corp. can answer questions about these "Don'ts" and many others. Give us a call at 504-866-5626.
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