Things to Avoid While Buying a Home
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Some new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller says "yes" and the lender approves the loan. There still remain a few major hurdles to jump before your loan closes. We have given you a list of things below we suggest you avoid when waiting for closing.
Don't throw your money around. Although you may be listing ways to turn your new house into a showplace, avoid major purchases like appliances, electronics, or expensive furnishings. We also recommend that you avoid vacations and car purchases until your loan closes. Using credit cards to buy furniture could jeopardize your loan process by altering your numbers dramatically. It's even a mistake to make those big purchases with cash. Lending Institutions are examining your cash on hand when considering your loan.
Don't go on a job search. Your recent job history should show stability. Getting a new career before you apply for a mortgage may not compromise your approval at all. However, if you switch careers before your loan is approved, your process could fail or be bogged down.
Don't switch your accounts to a new bank or move around your finances. Bank statements from the last few months for accounts in your name (checking, savings, money market, and other assets) will be analyzed as the lender makes decisions regarding your application. To avoid potential fraud, most lending institutions want a detailed paper trail to document the source of all funds. Even for practical purposes, moving around finances or switching banks may make it harder for your lending institution to verify your bank history.
Don't give your FSBO (for sale by owner) seller earnest money, delivered to his door. Until the completion of the deal, the earnest money actually belongs to you. Your seller might not realize that any good faith funds is to be used for your expenses upon closing. Get an attorney or other neutral person who can hold the deposit or place it in a trust account until you close. Your purchase contract should dictate who keeps the deposit if the home purchase does not go through.
North Star Mortgage Realty can answer questions about these "Don'ts" and many others. Call us: 408-402-5936.