Don't Trip Yourself up While Buying a New Home
Some new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller says "yes" and the lender approves the loan. Until your keys are in hand, there still remain some hurdles to jump. Below you'll find a list of actions to avoid during this crucial time of your home purchase.
Don't throw your money around. Although you may be listing ways to turn your new home into a showplace, avoid major purchases like appliances, electronics, or expensive furnishings. You will also want to avoid vacations and car purchases until the closing of your loan. Financing your bedroom furniture with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. It's also a red flag to make those large purchases with cash. Lending Institutions are examining your cash on hand when considering your loan.
Don't look for a new career. Lending Institutions look for a consistent work history on your application. Finding a new job (especially one with a bump in salary) may not hinder your ability to qualify for your mortgage. However, switching careers during the approval process could affect your approval.
Don't take your accounts to a new bank or move around your money. Bank statements from recent months for all of your accounts (checking, savings, money market, and other accounts) will be reviewed as the lender makes decisions regarding your application. The lending institution looks for a steady flow of your funds each pay period, in the interest of ruling out fraud. No matter the reason, switching banks or transferring money can raise a red flag with the lender and slow your application process.
Don't deliver earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your earnest money belongs to you, not the seller up until the deal closes. Although your FSBO seller might not know this, the good faith funds should be used for your closing expenses. Get a lawyer or other neutral person who will hold the funds or place them in a trust account until closing. If your transaction fails, your purchase contract should specify to whom your good faith funds should go.
Capacity Lending, LLC can answer questions about these "Don'ts" and many others. Call us at 469-640-0400.