Things to Avoid While Purchasing a New Home
Some new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller says "yes" and the loan is approved. Until closing, there still remain some hoops to jump through. Here are some things to stay clear of during the home buying process to be sure your transaction goes smoothly.
Don't buy big-ticket items. You may be itching to turn your new living room into a showplace, or celebrate your new castle, but keep away from expensive purchases like furniture, cars, appliances, or vacations until the loan closes. Your credit numbers could change suddenly if you make a huge purchase using credit cards. It's also a red flag to make those big purchases with cash. Lending Institutions are examining your cash reserve when considering your loan.
Don't get a new career. Consistency in your work history is a good thing to lenders. Finding a new job (particularly one with a better paycheck) may not affect your ability to qualify for your loan. However, finding a new job during your approval process may affect your approval.
Don't move cash around or change banks. Bank statements from the last two or three months for accounts in your name (checking, savings, money market, and other accounts) will probably be studied as the lender makes decisions regarding your approval. To eliminate potential fraud, most loans need thorough paperwork to determine the source of all cash. Switching banks or transferring money to another account - for whatever purpose - could make it harder for the lender to document your funds.
Don't deliver earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until the sale is complete, the good faith deposit remains yours. Although your seller may not know this, any good faith funds should be used for the buyer's closing expenses. A neutral party, like an attorney can hold onto your earnest funds, or you may place them temporarily into a trust account until closing. The disposition of good faith funds, in the case of a failed transaction, should be written in the purchase agreement with your seller.
Capacity Lending, LLC can answer questions about these "Don'ts" and many others. Call us at 469-640-0400.