Things to Avoid While Purchasing a Home
Some new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller accepts their offer and the lender approves their loan. Keep in mind that until your keys are in hand, your lender is watching you very closely. Below you’ll find a list of actions to avoid during this crucial time of your home purchase.
Don’t empty your wallet on big-ticket items You may be itching to turn your new living room into a home magazine cover, or celebrate your new castle, but stay away from major purchases like furniture, jewelry, appliances, or vacations until closing. Financing new Plasma TVs with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. Since lending institutions are perusing your bank accounts, a large cash purchase is also a bad idea.
Don’t go on a job search. Lenders feel comfortable seeing a consistent work history on your application forms. Changing jobs may not jeopardize your ability to qualify for a loan – particularly if you are improving your salary. However, switching careers in the middle of the loan process may influence your approval.
Don’t change banks or move money around in your accounts. Most lenders will ask for recent bank statements of accounts in your name: checking, savings, money market, and other liquid assets. The lending institution looks for a steady flow of your money over the month, in order to rule out fraud. Even for innocent purposes, transferring finances or switching banks may make it harder for your lender to document your account history.
Don’t deliver a “good faith” deposit directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your earnest money is yours, not the seller’s up until the deal closes. A FSBO seller may not know that this earnest money must go toward your expenses at closing. A neutral party, like an attorney can hold onto your earnest funds, or you may put them temporarily into a trust account until you close. If your home purchase fails, your purchase contract should document to whom the good faith deposit should go.