Things to Avoid While Purchasing a New Home
Some new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller accepts their offer and the loan is approved. There still remain a few major hurdles to jump before the house is realy yours. We have listed some things below we suggest you stay away from when waiting for your loan to close.
Don't overspend on big-ticket items Although you will be planning ways to turn your new house into a castle, avoid major purchases like appliances, electronics, or furniture. You will also want to avoid vacations and vehicle purchases until the closing of your loan. Your lender may send up red flags if you buy your electronics on your credit cards during your loan process. Because lending institutions are looking closely at your financial accounts, a large cash purchase is also not advised.
Don't get a new career. Stability in your work history is a good thing to banks and other lenders. Changing jobs may not jeopardize your ability to qualify for a mortgage loan - especially if you are getting a bigger paycheck. However, switching careers in the middle of your approval process might affect whether or not you are approved.
Don't switch your accounts to a new bank or move around your cash. As the lending institution reviews your mortgage loan application, you will probably be required to provide bank statements for the last two or three months on your saving and checking accounts, money market accounts and other liquid finances. To avoid potential fraud, most lenders need detailed paperwork to determine the source of all funds. Even for practical purposes, transferring finances or changing banks may make it difficult for the lending institution to document your bank history.
Don't give funds directly to your seller (usually in the case of of "for sale by owner") for earnest money. Until closing, any earnest money actually belongs to you. Although your seller may not know this, the earnest money must go toward the buyer's closing expenses. Get an attorney or other neutral person who will hold the money or place it in a trust account until you close. Your purchase agreement should document where the funds go if the transaction fails.
Mason Mortgage Advisors can walk you through the pitfalls of getting a mortgage. Give us a call: 314-395-8300.
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