Things to Avoid While Purchasing a Home
Some new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller accepts their offer and the lender approves their loan. Keep in mind that until your keys are in hand, your lender is watching your accounts very closely. Below you'll find a list of things to avoid during this crucial time of your home purchase.
Don't buy big-ticket items. Although you will be listing ways to turn your new home into a castle, try to stay away from major purchases like appliances, electronics, or expensive furnishings. We also recommend that you keep away from vacations and vehicle purchases until your loan closes. You may send up red flags with your lender if you purchase new electronics on your credit cards in the middle of your loan process. Because lending institutions are perusing your financial accounts, a large cash purchase is also not advised.
Don't go on a career search. Consistency in your job history is a positive thing to lending institutions. Getting a new job may not affect your ability to qualify for a loan - especially if you are going to be making more money. But for some people, switching jobs during the loan approval process could raise concern and stymie your application.
Don't take your accounts to a new bank or move around your money. Bank statements from the last two or three months for accounts in your name (savings, checking, money market, and other accounts) will likely be studied as the lender makes decisions regarding your approval. To detect potential fraud, most lenders require a thorough paper trail to document the source of all funds. Switching banks or transferring money elsewhere - no matter the purpose - may hinder the review of your accounts.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. As a rule, your good faith money is yours, not the seller's until the deal closes. Any earnest money is to be applied to your expenses upon closing; some individual sellers may not understand this. An attorney or other type of neutral party can hold onto your funds, or you may place them temporarily into a trust account until you close. The final disposition of earnest funds, if your transaction fails, should be included in the contract with the seller.
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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