Things to Avoid While Purchasing a New Home
Many new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller accepts their offer and the lender approves their loan. There still remain a few major hurdles to jump before the house is realy yours. We have given you a list of things below you will want to avoid when waiting for closing.
Don't buy luxury items. You may be itching to order that new easy-chair for the soon-to-be-yours den, but it's best to stay away from making large purchases like furniture, appliances, electronic equipment, or vacations until your home 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 banks take into consideration your available cash when approving your mortgage.
Don't go on a job search. Stability in your career history is a good thing to lending institutions. Getting a new job may not affect your ability to qualify for a loan - especially if you are getting a better salary. However, if you switch careers before approval, your mortgage process could fail or be stalled.
Don't change banks or move cash around in your bank accounts. Bank statements from recent months for all of your accounts (savings, checking, money market, and other assets) will be analyzed as the lender makes decisions regarding your loan application. In order to eliminate fraud, lenders require a clear and consistent picture of how you earn your money and where additional wealth comes from. Changing banks or transferring finances elsewhere - even if its merely to consolidate funds - may make it harder for the lender to verify your funds.
Don't deliver earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your earnest money does not belong to the seller: it is actually yours until closing. Some FSBO sellers might not realize that this earnest money is to be applied to your expenses upon closing. Find a lawyer or other neutral party who can hold the money or put it in a trust account until closing. The disposition of earnest money, in the case of a failed transaction, should be included in the purchase agreement with the seller.
Yamini Patel can walk you through the pitfalls of getting a mortgage. Call us at (832) 730-2000.