Things to Avoid While Buying a New Home
What's better than getting a bunch of new furniture to go in your future home? Nothing. But buying big ticket items before your loan closes can be harmful. Until your keys are in hand, there still remain some hoops to jump through. Below you'll find a list of things to avoid during this critical time of your home purchase.
Don't overspend 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 expensive purchases like furniture, cars, appliances, or vacations until the loan closes. Your credit numbers could be altered suddenly if you make a huge purchase using plastic. It's even a red flag to make those large purchases with cash. Lenders are examining your cash reserve when considering your loan.
Don't look for a new job. Your recent job history should show consistency. Finding a new career (especially one with a bigger paycheck) may not change your ability to qualify for your mortgage loan. But for some people, changing careers during the mortgage loan approval process could raise concern and affect your approval.
Don't move money around or switch banks. While the lending institution reviews your loan package, you will probably be required to produce bank statements for the last few months for your checking and savings accounts, money market funds and other liquid finances. The lending institution is looking for a consistent flow of your money over the month, in the interest of avoiding fraud. No matter the purpose, changing banks or transferring money may raise a red flag with the lender and impede your loan process.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. Until the sale is complete, the good faith deposit remains yours. The FSBO seller might not realize that your good faith money is to be applied to your expenses upon closing. An attorney or other type of neutral party can hold onto your earnest funds, or you may put them temporarily into a trust account until closing. The final disposition of good faith funds, in the case of a failed transaction, should be specified in the purchase agreement with your seller.
At Coleman Mortgage Company, we answer questions about this process every day. Call us at 972-932-9083.