Things to Avoid While Purchasing a New Home
What's better than buying a bunch of new furnishings to go in your future home? Nothing. But buying big ticket items before closing can be harmful. Until the house is really yours, there are still some hurdles to jump. Here are some things to stay clear of during the home buying process to be sure your transaction goes well.
Don't overspend on big-ticket items You may be itching to turn your new living room into a home magazine cover, or celebrate your new castle, but keep away from big purchases like furniture, jewelry, appliances, or vacations 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. It's even a mistake to make those big purchases with cash. Lenders are examining your available cash when considering your loan.
Don't get a new job. Your recent work history should show stability. Getting a new job may not affect your ability to qualify for a loan - particularly if you are going to be making more money. But for some people, switching jobs during the mortgage approval process may raise concern and stymie your application.
Don't change banks or move finances around in your accounts. While your lending institution considers your loan application, you will probably be required to provide bank statements for the last few months on your checking and savings accounts, money market funds and other liquid assets. To avoid potential fraud, most lending institutions need a detailed paper trail to verify the source of all cash. No matter the reason, switching banks or moving funds from one account to another could raise a red flag with the lender and slow your qualification process.
Don't hand over a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Until closing, any good faith deposit remains yours. Although some individual sellers may not know this, the good faith money should be applied to your closing expenses. We recommend that you put the deposit into a trust account, or get a neutral party, like a lawyer, to hold it until the closing of the sale. The contract should document to whom the funds go if the home purchase fails.
New Millennium Mortgage Co. NMLS: 331173 can answer questions about these "Don'ts" and many others. Give us a call: (941) 366-5800.
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