Things to Avoid While Buying a Home
What's more fun than buying a bunch of new furniture to adorn your future home? Not much. But buying big ticket items before closing can be a misstep. Until closing, there still remain some hoops to jump through. Below you'll find a list of actions to avoid during this critical time of your home purchase.
Don't empty your wallet on big-ticket items You may be itching to turn your new kitchen into a showplace, or celebrate your new dream home, but stay away from expensive purchases like furniture, jewelry, appliances, or vacations until the loan closes. Financing new Plasma TVs with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. It's also a mistake to make those big-ticket purchases using cash. Lenders are looking at your available cash when considering your loan.
Don't go on a job search. Stability in your work history is a positive thing to lenders. Getting a new job may not compromise your ability to qualify for a mortgage loan - particularly if you are getting a bigger paycheck. But in some cases, changing careers during the mortgage approval process may bring concern and stymie your approval.
Don't change banks or move money around in your bank accounts. As the lending institution reviews your mortgage loan package, you will likely be required to submit bank statements for the last few months for your saving and checking accounts, money market accounts and other liquid finances. Your lending institution looks for a steady rise and fall of your funds each pay period, in the interest of avoiding fraud. Switching banks or moving money to another account - even if its merely to pool funds - could make it harder for the lender to verify your funds.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. Your good faith money does not belong to the seller: it remains yours until the transaction is final. Your earnest funds are to go toward your expenses closing; some individual sellers may not realize this. A neutral party, like an attorney can hang onto your earnest money, or you may put it temporarily into a trust account until closing. Your contract should document who keeps the deposit if the home purchase falls through.
At Yamini Patel, we answer questions about this process every day. Give us a call: (832) 730-2000.