Things to Avoid While Purchasing a New Home
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Many new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller says "yes" and the loan is approved. Keep in mind that until closing, your lender is watching your accounts very closely. We have given you a list of things below we suggest you avoid when waiting for closing.
Don't make expensive purchases. Although you will be listing ways to turn your new house into a showplace, avoid big ticket purchases like appliances, electronics, or expensive furnishings. We also recommend that you avoid vacations and car purchases until the closing of your loan. Your lender may send up red flags if you buy your appliances on your credit cards during your loan process. It's also a red flag to make those large purchases with cash. Lending Institutions are looking at your available cash when considering your loan.
Don't go on a job search. Stability in your work history is a positive thing to banks and other lenders. Getting a new job may not compromise your ability to qualify for a loan - especially if you are going to be making more money. However, if you switch careers before your loan is approved, your mortgage process could fail or be stalled.
Don't take your accounts to a new bank or move around your money. Bank statements from the last few months for all of your accounts (checking, savings, money market, and other accounts) will probably be studied as the lending institution considers your mortgage application. To eliminate potential fraud, most lending institutions want a detailed paper trail to document the source of all incoming funds. Switching banks or moving finances elsewhere - for whatever purpose - might make it harder for your lender to document your funds.
Don't give a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your earnest money belongs to you, not to the seller up until the deal closes. A FSBO seller may not know that any good faith money should be applied to your expenses at closing. Get an attorney or other neutral person who can hang on to the funds or place them in a trust account until you close. If your sale falls through, the contract with the seller should specify where this good faith funds should go.
SMI Lending, Inc. can walk you through the pitfalls of getting a mortgage. Call us: (972) 818-0022.