Things to Avoid While Buying a New Home
What's better than buying a bunch of new stuff to adorn your future home? Not much. But making big ticket purchases before closing can be a mistake. Until the house is really yours, there are still some hoops to jump through. We have listed some things below you will want to avoid when waiting for closing.
Don't overspend on big-ticket items Although you will be planning ways to turn your new house into a castle, try to stay away from major purchases like appliances, electronics, or expensive furnishings. You will also want to avoid vacations and car purchases until the closing of your loan. Your credit numbers could change suddenly if you purchase new furniture using credit cards. Using cash to purchase big-ticket items can also be a bad idea: many lending institutions take into consideration your cash on hand when approving your mortgage loan.
Don't go on a career search. Lending Institutions feel comfortable seeing a consistent career history on your paperwork. Changing jobs may not jeopardize your ability to qualify for a loan - particularly if you are improving your salary. However, if you switch careers before approval, your process could fail or be stalled.
Don't move money around or switch banks. As your lender reviews your mortgage loan application, you will probably be required to submit bank statements for the last few months for your saving and checking accounts, money market funds and other liquid wealth. To avoid fraud, lenders will need a clear and consistent picture of how you earn your money and where any additional funds come from. Changing banks or moving money to another account - no matter the reason - could make it difficult for your lender to document your funds.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, made out directly to him. Until closing, any earnest money actually belongs to you. Although your FSBO seller may not realize this, the good faith money should be used for your closing expenses. A neutral party, like an attorney can hang onto your deposit, or you may put it temporarily into a trust account until closing. The disposition of good faith funds, in the case of a failed transaction, should be indicated in the purchase agreement with the seller.
At Mason Mortgage Advisors, we answer questions about this process every day. Give us a call at 314-395-8300.
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