Things to Avoid While Buying a New Home
Some new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller says "yes" and the loan is approved. Keep in mind that until you get the keys, your lender is watching your accounts very closely. Below you'll find a list of things to avoid during this crucial time of your home purchase.
Don't throw your money around. It may be tempting to order that new sofa for the soon-to-be-yours living room, but it's advisable to avoid making large buys like furniture, appliances, electronic equipment, or vacations until closing. Your lender may send up red flags if you buy new electronics on your credit cards during your loan process. Using cash to buy big-ticket items can even be an issue: many lenders consider your available cash when approving your application.
Don't get a new job. Your recent job history should show stability. Finding a new job (especially one with a better paycheck) may not jeopardize your ability to qualify for your mortgage. However, if you switch careers before approval, your mortgage process could fail or be stalled.
Don't move money around or change banks. While your lender considers your loan application, you will probably be instructed to produce bank statements for the last two or three months for your checking and savings accounts, money market accounts and other liquid wealth. To detect fraud, lenders require clear documentation of how you earn your living and where any additional money comes from. Even for innocent purposes, moving around finances or switching banks may make it more difficult for the lender to document your bank history.
Don't give cash directly to your seller (usually in cases of "for sale by owner") to be used as a "good faith" deposit. Until closing, any earnest money remains yours. Your earnest money is to go toward your expenses closing; some sellers might not know this. We recommend that you put the money into a trust account, or get a neutral party, like a lawyer, to hold it until closing. The purchase agreement should indicate who gets the money if the home purchase does not go through.
First Southeast Mortgage Corporation can answer questions about these "Don'ts" and many others. Give us a call: 954.920.9799.