Things to Avoid While Buying a New Home
Many new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller says "yes" and the lender approves their loan. It's wise to remember that until closing, your lender is watching your accounts very closely. Here are some actions to refrain from before closing to assure the transaction goes smoothly.
Don't buy luxury items. Although you may be dreaming of ways to turn your new home into a showplace, try to stay away from big ticket purchases like appliances, electronics, or furniture. You will also want to avoid vacations and car purchases until the closing of your loan. Using credit cards to buy new living room furniture could compromise your lending process by distorting your numbers. Using cash to purchase big-ticket items can also create a mistake: most lenders look at your cash on hand when approving your mortgage.
Don't get a new job. Your recent work history should show stability. Getting a new job before you start the application process for a mortgage loan may not compromise your approval at all. However, finding a new career during your application process may influence your approval.
Don't take your accounts to a new bank or move around your finances. As the lending institution considers your mortgage application, you will likely be required to provide bank statements for the last two or three months on your checking and savings accounts, money market accounts and other liquid finances. The lender looks for a consistent rise and fall of your money each pay period, in the interest of avoiding fraud. Even for innocent purposes, transferring money or changing banks might make it difficult for your lending institution to document your bank history.
Don't give money directly to your seller (usually in cases of "for sale by owner") to be considered earnest money. Until the sale is complete, any good faith deposit actually belongs to you. Although some individual sellers may not realize this, any earnest money should be applied to your closing expenses. An attorney or other type of neutral party can hold your funds, or you may place them temporarily into a trust account until closing. The disposition of good faith money, in the case of a failed transaction, should be specified in the purchase agreement with your seller.
New Millennium Mortgage Co. NMLS: 331173 can walk you through the pitfalls of getting a mortgage. Call us: (941) 366-5800.
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