Things to Avoid While Buying a Home
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Some new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller accepts their offer and the lender approves the loan. Until closing, there are still some hoops to jump through. We have listed some things below we suggest you stay away from when waiting for closing.
Don't empty your wallet on big-ticket items You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new castle, but keep away from big purchases like furniture, cars, appliances, or vacations until closing. Financing your Plasma TVs with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. Using cash to buy big items can also be a problem: most lending institutions consider your cash on hand when approving your mortgage loan.
Don't get a new job. Your recent job history should show consistency. Getting a new job before you start the application process for a loan may not affect your approval at all. But for some people, changing careers during the loan application process may raise concern and affect your approval.
Don't move cash around or change banks. While the lender considers your mortgage loan application, you will likely be asked to provide bank statements for the last two or three months on your checking accounts, savings accounts, money market funds and other liquid assets. In order to detect fraud, lenders want to see clear documentation of how you earn your money and where additional money comes from. Changing banks or moving money elsewhere - no matter the reason - may make it harder for your lender to document your funds.
Don't give funds directly to your seller (commonly in cases of "for sale by owner") to be considered a "good faith" deposit. As a rule, your good faith deposit is yours, not the seller's until the sale is final. Although your FSBO seller might not understand this, your good faith money should go toward your closing expenses. Find a lawyer or other neutral person who is able to hold the funds or put them in a trust account until you close. The final disposition of good faith funds, in the case of a failed transaction, should be indicated in the purchase agreement with the seller.
Executive Lending Group can answer questions about these "Don'ts" and many others. Call us at (816) 525-8000.
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