Things to Avoid While Purchasing a New Home
With the thrill that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of taking their enthusiasm straight to the mall or appliance store. Keep in mind that until closing, your lender is watching you 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. You may be itching to turn your new living room into a showplace, or celebrate your new castle, but keep away from big purchases like furniture, jewelry, appliances, or vacations until closing. Using credit cards to buy new living room furniture could compromise your loan process by changing your numbers dramatically. Using cash to purchase big-ticket items can also be an issue: most lenders take into consideration your cash reserve when approving your loan.
Don't get a new job. Lenders look for a consistent career history on your application forms. Getting a new job before you apply for a mortgage loan may not compromise your approval at all. However, finding a new career in the middle of the application process might influence your approval.
Don't switch banks or move cash around in your bank accounts. As your lending institution considers your loan package, you will likely be instructed to submit bank statements for recent months on your checking and savings accounts, money market accounts and other liquid assets. Your lending institution wants to see a steady rise and fall of your funds over the month, in order to rule out fraud. No matter the reason, moving banks or transferring funds can raise a red flag with your lender and slow your application process.
Don't give funds directly to your seller (generally in cases of "for sale by owner") to be considered a "good faith" deposit. As a rule, your good faith money is yours, not the seller's up until the deal closes. Your seller might not realize that these good faith funds is to go toward your expenses at closing. Find a lawyer or other neutral party who is able to hang on to the deposit or put it in a trust account until closing. Your contract should indicate to whom the funds go if the home purchase fails.
Saab Mortgage can answer questions about these "Don'ts" and many others. Give us a call at 703-288-0777.
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