Things to Avoid While Buying a New Home
What's better 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 are still some hoops to jump through. Here are some actions to stay clear of during the home buying process to be sure your transaction goes smoothly.
Don't buy luxury items. Although you may be dreaming of ways to turn your new home into a showplace, avoid big ticket purchases like appliances, electronics, or furniture. We also recommend that you keep away from vacations and car purchases until the closing of your loan. Financing new furniture with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. Because lenders are examining your bank accounts, a large cash purchase is also not advised.
Don't look for a new career. Lenders like to see a consistent work history on your application. Finding a new job (especially one with a better paycheck) may not jeopardize your ability to qualify for your mortgage. But for some people, changing careers during the loan approval process may bring concern and hinder your application.
Don't move finances around or switch banks. Bank statements from the last two or three months for accounts in your name (savings, checking, money market, and other accounts) will likely be analyzed as the lending institution makes decisions regarding your loan application. To avoid potential fraud, most lending institutions require thorough paperwork to verify the source of all incoming funds. Switching banks or transferring finances to another account - even if its merely to consolidate funds - could hinder the review of your funds.
Don't give money directly to your seller (commonly in the case of of "for sale by owner") for a "good faith" deposit. Until the sale is complete, the good faith deposit remains yours. Although your seller may not realize this, any good faith money must be applied to your closing expenses. We recommend that you put the money into a trust account, or get a neutral party, like an attorney, to hold it until closing. Should your home purchase fail, your contract with the seller should dictate where this good faith funds should go.
At Mutual Security Mortgage, we answer questions about this process every day. Call us: (303) 931-7879.