Things to Avoid While Purchasing 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 furniture store. It's best to remember that until your keys are in hand, your lender is watching you very closely. We have listed some actions below you will want to stay away from when waiting for your loan to close.
Don't overspend 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 your loan closes. Your credit numbers could change suddenly if you make a huge purchase using credit cards. Using cash to buy expensive items can even create a problem: most lending institutions take into consideration your available cash when approving your mortgage.
Don't look for a new career. Lenders feel comfortable seeing a consistent career history on your application. Finding a new job (especially one with a better paycheck) may not jeopardize your ability to qualify for a loan. However, getting a new job during your application process might affect whether or not you are approved.
Don't switch banks or move finances around in your bank accounts. While the lending institution considers your loan package, you will probably be asked to provide bank statements for the last two or three months on your checking accounts, savings accounts, money market funds and other liquid assets. To eliminate potential fraud, most loans require thorough paperwork to verify the source of all incoming funds. Even for practical purposes, transferring funds or switching banks could make it harder for the lending institution to confirm your account history.
Don't deliver a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Until the sale is complete, any good faith deposit actually belongs to you. Some sellers may not know that your good faith funds should be used for your expenses upon closing. Get a lawyer or other neutral party who is able to hold the deposit or place it in a trust account until closing. The purchase agreement should dictate where the deposit goes if the home purchase fails.