Things to Avoid While Buying a Home
With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of taking their enthusiasm straight to the mall or furniture store. It's wise to remember that until your keys are in hand, your lender is watching your accounts very closely. Here are some actions to refrain from before closing to assure the transaction goes smoothly.
Don't buy big-ticket items. You may be itching to turn your new living room into a home magazine cover, or celebrate your new dream home, but stay away from expensive purchases like furniture, cars, appliances, or vacations until the loan closes. Financing your stainless steel appliances with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. Since lenders are perusing your financial accounts, a large cash purchase is also not advised.
Don't get a new job. Your recent job history should show stability. Getting a new job may not compromise your ability to qualify for a mortgage loan - especially if you are going to be making more money. But for some, getting a new job during the mortgage application process might raise concern and affect your approval.
Don't take your accounts to a new bank or move around your cash. Your lending institution will ask for recent bank statements on your accounts: checking, savings, money market, and other assets. Your lender is looking for a steady flow of your money each pay period, in the interest of avoiding fraud. Switching banks or transferring money to another account - no matter the purpose - may hinder the documentation of your accounts.
Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. As a rule, your earnest money belongs to you, not to the seller up until the deal closes. Although your seller might not understand this, any good faith funds should be applied to your closing expenses. It's wise to put the deposit into a trust account, or get a neutral party, like an attorney, to hold it until the closing of the sale. The final disposition of good faith funds, in the case of a failed transaction, should be documented in the purchase agreement with your seller.
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