Things to Avoid While Buying a New Home
With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of carrying their enthusiasm straight to the mall or appliance store. Keep in mind that until your keys are in hand, your lender is watching your finances very closely. Here are some things to stay clear of during the home buying process to assure the transaction goes smoothly.
Don't empty your wallet on big-ticket items You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new castle, but stay away from big purchases like furniture, jewelry, appliances, or vacations until closing. You may send up red flags with your lender if you finance your electronics on your credit cards in the middle of your loan process. It's also a bad idea to make those huge purchases using cash. Lending Institutions are looking at your cash reserve when considering your loan.
Don't get a new career. Your recent job history should show consistency. Changing jobs may not compromise your ability to qualify for a loan - particularly if you are going to be making more money. However, getting a new career during the approval process may affect whether or not you are approved.
Don't move money around or switch banks. As the lending institution considers your loan package, you will likely be asked to submit bank statements for recent months on your checking accounts, savings accounts, money market accounts and other liquid finances. Your lender looks for a consistent rise and fall of your funds over the pay period, in the interest of avoiding fraud. Even for practical reasons, moving around money or changing banks could make it harder for the lender to document your bank history.
Don't deliver a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith deposit is yours, not the seller's up until closing. Although your seller might not understand this, any earnest money must go toward the buyer's closing expenses. You'll want to put the money into a trust account, or get an attorney to hold it until the closing of the sale. Your purchase contract should specify who keeps the earnest funds if the transaction fails.
At New Millennium Mortgage Co. NMLS: 331173, we answer questions about this process every day. Call us: (941) 366-5800.
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