Things to Avoid While Buying a New Home
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With the thrill that comes with an accepted offer and a "yes" from the lender, some homebuyers make the error of taking their enthusiasm straight to the mall or furniture store. Keep in mind that until your keys are in hand, your lender is watching you very closely. We have given you a list of things below we suggest you avoid when waiting for your loan to close.
Don't throw your money around. You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new dream home, but stay away from big purchases like furniture, cars, appliances, or vacations until the loan closes. Using credit cards to buy new living room furniture could compromise your lending process by changing your numbers dramatically. Using cash to buy big-ticket items can also be a mistake: many lending institutions take into consideration your available cash when approving your application.
Don't get a new job. Consistency in your career history is a good thing to lending institutions. Getting a new job before you start the application process for a mortgage may not compromise your approval at all. But for some people, getting a new job during the mortgage loan approval process may raise concern and stymie your application.
Don't change banks or move money around in your bank accounts. As your lending institution considers your mortgage application, you will likely be asked to provide bank statements for recent months for your checking accounts, savings accounts, money market accounts and other liquid finances. To detect potential fraud, most lending institutions require detailed paperwork to determine the source of all funds. Even for practical purposes, transferring funds or changing banks may make it difficult for your lending institution to confirm your bank history.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. Until closing, the good faith deposit remains yours. Although some FSBO sellers might not know this, your good faith money should be applied to the buyer's closing expenses. You'll want to put the deposit into a trust account, or get an attorney to hold it until the deal closes. The disposition of good faith money, if your home purchase falls through, should be specified in the contract with the seller.
At Ward Kilduff Mortgage, we answer questions about this process every day. Call us at (860) 658-7100.