Things to Avoid While Buying a Home
What's more fun than buying a bunch of new furnishings to go in your future home? Nothing. But buying big ticket items before closing can be harmful. Keep in mind that until your keys are in hand, your lender is watching your finances very closely. Below you'll find a list of things to avoid during this critical time of your home purchase.
Don't buy luxury items. Although you may be dreaming of ways to turn your new house into a showplace, try to stay away from major purchases like appliances, electronics, or furniture. We also recommend that you avoid vacations and vehicle purchases until the closing of your loan. You may send up red flags with your lender if you finance new furniture on your credit cards in the middle of your loan process. Using cash to purchase big-ticket items can also create an issue: most lenders take into consideration your available cash when approving your mortgage loan.
Don't go on a job search. Consistency in your career history is a good thing to lenders. Getting a new job before you apply for a mortgage loan may not affect your approval at all. However, if you switch careers before your loan is approved, your process could fail or be stalled.
Don't switch your accounts to a new bank or move around your cash. Your lender will instruct the submission of recent bank statements of all of your accounts: checking, savings, money market, and other liquid assets. In order to avoid fraud, lenders need a clear and consistent picture of how you earn your living and where additional funds come from. No matter the reason, moving banks or moving money from one account to another can raise a red flag with the lender and slow your application process.
Don't give funds directly to your seller (usually in cases of "for sale by owner") for earnest money. Your earnest money does not belong to the seller: it remains yours until closing. Although some FSBO sellers might not realize this, any earnest money must go toward your closing expenses. It's advisable to put the money into a trust account, or get an attorney to hold it until the closing of the sale. The final disposition of good faith money, if your transaction fails, should be specified in the contract with the seller.
AmeriBest Mortgage can walk you through the pitfalls of getting a mortgage. Call us at 3217777277.