Things to Avoid While Buying a New Home
What's better than buying a bunch of new stuff to go in your future home? Not much. But making big purchases before your loan closes could be trouble. There are still a few major hurdles to jump before the keys are handed over. Here are some things to avoid during the home buying process to be sure your transaction goes well.
Don't overspend on big-ticket items Although you may be planning ways to turn your new home into a castle, avoid major purchases like appliances, electronics, or furniture. You will also want to avoid vacations and vehicle purchases until your loan closes. Using plastic to buy furniture could jeopardize your loan process by altering your numbers dramatically. It's also a mistake to make those big-ticket purchases with cash. Lending Institutions are looking at your cash reserve when considering your loan.
Don't get a new career. Your recent career history should show stability. Finding a new career (especially one with a better paycheck) may not jeopardize your ability to qualify for your loan. However, if you switch careers before approval, your loan process could fail or be stalled.
Don't switch your accounts to a new bank or move around your money. As your lending institution considers your mortgage package, you will likely be instructed to provide bank statements for the last few months for your saving and checking accounts, money market funds and other liquid wealth. To detect potential fraud, most loans need a detailed paper trail to document the source of all funds. Switching banks or moving funds to another account - even if its only to pool funds - could make it harder for the lender to document your funds.
Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. Until closing, the good faith money actually belongs to you. Although your seller might not know this, your earnest money must go toward your closing expenses. Get an attorney or other neutral person who is able to hold the money or place it in a trust account until closing. Your contract should dictate to whom the deposit goes if the home purchase does not go through.
At Prime Capital Mortgage Corp, we answer questions about this process every day. Give us a call: 248-644-1200.
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