Things to Avoid While Purchasing a New Home
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With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of carrying their enthusiasm straight to the mall or appliance store. Keep in mind that until your keys are in hand, your lender is watching your finances very closely. Here are some things to stay clear of during the home buying process to be sure the transaction goes well.
Don't overspend on big-ticket items It may be tempting to buy that new easy-chair for the soon-to-be-yours parlor, but it's best to avoid making major buys like furniture, appliances, electronic equipment, or vacations until closing. You may send up red flags with your lender if you buy your electronics on your credit cards in the middle of your loan process. Using cash to purchase big items can also be a bad idea: many banks consider your available cash when approving your mortgage.
Don't get a new career. Consistency in your career history is a positive thing to lending institutions. Getting a new career before you apply for a mortgage may not affect your approval at all. But for some, getting a new job during the mortgage loan application process might bring concern and affect your application.
Don't move cash around or change banks. While the lender reviews your mortgage loan package, you will probably be instructed to produce bank statements for the last few months for your checking and savings accounts, money market accounts and other liquid finances. In order to detect fraud, lenders need clear documentation of how you earn your money and where additional money comes from. No matter the reason, changing banks or moving funds from one account to another might raise a red flag with the lender and slow your qualification process.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. Your earnest money does not belong to the seller: it is actually yours until the sale closes. Although your seller may not understand this, any good faith funds should be applied to your closing expenses. Find a lawyer or other neutral person who will hang on to the funds or place them in a trust account until you close. The disposition of earnest funds, in the case of a failed transaction, should be included in the purchase agreement with the seller.
Primary Residential Mortgage, Inc. can answer questions about these "Don'ts" and many others. Give us a call: (214) 736-9466.