Things to Avoid While Buying a New Home
What's more fun than buying a bunch of new furniture to adorn your future home? Not much. But making big purchases before closing could be trouble. Until the keys are handed over, there still remain some hoops to jump through. We have listed some things below you will want to stay away from when waiting for your loan to close.
Don't overspend on big-ticket items You may be itching to buy that new sofa for the soon-to-be-yours parlor, but it's advisable to avoid making large purchases like furniture, appliances, jewelry, or cars until closing. Using plastic to buy furniture could jeopardize your loan process by distorting your numbers. Since lending institutions are reviewing your bank accounts, a large cash purchase is also a mistake.
Don't look for a new job. Consistency in your work history is a positive thing to lenders. Changing jobs may not jeopardize your ability to qualify for a mortgage loan - especially if you are going to be making more money. However, if you switch careers before you qualify, your mortgage process could fail or be stalled.
Don't change banks or move finances around in your bank accounts. Bank statements from recent months for all of your accounts (checking, savings, money market, and other accounts) will likely be reviewed as the lending institution considers your application. To detect potential fraud, most loans need a thorough paper trail to determine the source of all incoming funds. Even for practical purposes, transferring funds or switching banks may make it more difficult for your lender to document your bank history.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. Your good faith money does not belong to the seller: it is actually yours until the sale closes. The good faith funds are to go toward your expenses upon closing; some FSBO sellers might not know this. A neutral party, like an attorney can hold onto your funds, or you may place them temporarily into a trust account until closing. The disposition of good faith funds, if your transaction fails, should be documented in the contract with your seller.
First State Bank can answer questions about these "Don'ts" and many others. Give us a call: 4025970500.