Things to Avoid While Buying a New Home
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What's better than buying a bunch of new stuff to go in your future home? Nothing. But buying big ticket items before closing can be harmful. There still remain a few major hurdles to jump before the house is really yours. Below you'll find a list of things to avoid during this crucial time of your home purchase.
Don't overspend on big-ticket items Although you may be planning ways to turn your new home into a showplace, avoid big ticket purchases like appliances, electronics, or furniture. We also recommend that you avoid vacations and vehicle purchases until your loan closes. Using plastic to buy new living room furniture could jeopardize your lending process by distorting your numbers. Since lending institutions are reviewing your financial accounts, a large cash purchase is also not advised.
Don't get a new career. Your recent career history should show consistency. Getting a new job before you apply for a mortgage loan may not jeopardize your approval at all. However, if you switch careers before your loan is approved, your loan process could fail or be bogged down.
Don't move cash around or switch banks. Bank statements from the last few months for all of your accounts (savings, checking, money market, and others) will likely be studied as the lender considers your mortgage application. The lending institution needs to see a steady flow of your funds over the month, in order to rule out fraud. Switching banks or moving finances to another account - even if its just to consolidate funds - might hinder the review of your accounts.
Don't give funds directly to your seller (commonly in the case of of "for sale by owner") for earnest money. As a rule, your earnest money belongs to you, not the seller up until closing. Your good faith funds are to be used for your expenses upon closing; some individual sellers might not understand this. It's advisable to put the funds into a trust account, or get an attorney to hold them until the deal closes. The disposition of earnest funds, if your home purchase falls through, should be documented in the purchase agreement with the seller.
Mortgage Xperts can walk you through the pitfalls of getting a mortgage. Call us: 352-347-3303.