Things to Avoid While Buying a Home
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In the rush of excitement that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of carrying their enthusiasm straight to the mall or appliance store. Keep in mind that until closing, your lender is watching your accounts very closely. 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 You may be tempted to order that new sofa for the soon-to-be-yours den, but it's advisable to avoid making major purchases like furniture, appliances, jewelry, or cars until closing. Your credit numbers could be altered suddenly if you purchase new furniture using plastic. Since lenders are looking closely at your bank accounts, a large cash purchase is also not advised.
Don't go on a career search. Your recent career history should show stability. Finding a new job (particularly one with a bump in salary) may not affect your ability to qualify for your mortgage. However, getting a new job during the approval process might affect whether or not you are approved.
Don't switch banks or move finances around in your accounts. Bank statements from the last few months for accounts in your name (savings, checking, money market, and other assets) will likely be studied as the lender considers your mortgage application. The lender looks for a steady rise and fall of your funds over the pay period, in the interest of ruling out fraud. Even for innocent reasons, transferring funds or switching banks might make it harder for your lender to document your account history.
Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith deposit is yours, not the seller's up until closing. Some FSBO sellers might not know that your good faith funds should be applied to your expenses at closing. Find a lawyer or other neutral party who will hang on to the deposit or put it in a trust account until you close. Your purchase contract should specify who gets the deposit if the home purchase fails.
Cottingham Mortgage Inc. can walk you through the pitfalls of getting a mortgage. Call us: (800) 288-9693.