Things to Avoid While Buying a Home
Many 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 are still a few major hurdles to jump before your loan closes. Below you'll find a list of actions to stay away from during this crucial time of your home purchase.
Don't overspend on big-ticket items It may be tempting to order that new easy-chair for the soon-to-be-yours den, but it's best to avoid making big ticket buys 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 furniture on your credit cards during your loan process. Because lending institutions are looking closely at your bank accounts, a large cash purchase is also not advised.
Don't get a new job. Your recent work history should show stability. Finding a new career (especially one with a better salary) may not hinder your ability to qualify for a mortgage. But in some cases, changing jobs during the mortgage loan application process might bring concern and hinder your application.
Don't move money around or switch banks. While the lender reviews your loan package, you will likely be asked to submit bank statements for the last few months for your checking accounts, savings accounts, money market funds and other liquid finances. To detect potential fraud, most lenders need thorough paperwork to document the source of all incoming funds. No matter the reason, switching banks or moving funds from one account to another might raise a red flag with the lender and slow your approval process.
Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your good faith deposit does not belong to the seller: it remains yours until closing. Although your seller might not know this, the good faith money should be used for the buyer's closing expenses. Get an attorney or other neutral person who is able to hang on to the funds or put them in a trust account until you close. The final disposition of earnest money, if your home purchase falls through, should be specified in the contract with the seller.
At Coastal Mortgage Corp., we answer questions about this process every day. Give us a call at 504-866-5626.
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