Things to Avoid While Purchasing a New Home
Many new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller says "yes" and the lender approves their loan. Until closing, there are still some hoops to jump through. We have listed some actions below you will want to avoid when waiting for closing.
Don't overspend on big-ticket items It may be tempting to buy that new easy-chair for the soon-to-be-yours den, but it's best to avoid making major buys like furniture, appliances, electronic equipment, or vacations until your home loan closes. Financing your bedroom furniture with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. Using cash to purchase big-ticket items can even create a bad idea: most lending institutions look at your available cash when approving your mortgage.
Don't get a new job. Lending Institutions like to see a consistent work history on your paperwork. Getting a new job may not affect your ability to qualify for a loan - especially if you are improving your salary. But for some, changing careers during the mortgage application process might bring concern and hinder your approval.
Don't switch banks or move cash around in your bank accounts. Bank statements from recent months for accounts in your name (savings, checking, money market, and others) will probably be reviewed as the lender considers your application. To avoid potential fraud, most lenders want a detailed paper trail to document the source of all incoming funds. Changing banks or moving money elsewhere - for whatever reason - may hinder the review of your funds.
Don't give cash directly to your seller (usually in cases of "for sale by owner") for earnest money. Your earnest money does not belong to the seller: it remains yours until the sale closes. The earnest funds are to go toward your expenses upon closing; some sellers may not know this. We recommend that you put the funds into a trust account, or get a neutral party, like an attorney to hold them until the deal closes. The final disposition of good faith money, in the case of a failed transaction, should be specified in the purchase agreement with your seller.
U.S.A. Lending, Inc. can walk you through the pitfalls of getting a mortgage. Give us a call: 305-967-7200.