Things to Avoid While Purchasing a New Home
Many new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller says "yes" and the loan is approved. Keep in mind that until your keys are in hand, your lender is watching your finances very closely. Here are some actions to refrain from before closing to assure your transaction goes smoothly.
Don't make expensive purchases. Although you will be listing ways to turn your new house into a castle, avoid big ticket purchases like appliances, electronics, or furniture. You will also want to avoid vacations and car purchases until your loan closes. Using plastic to buy furniture could jeopardize your lending process by altering your numbers dramatically. It's even a bad idea to make those large purchases with cash. Lenders are examining your cash reserve when considering your loan.
Don't look for a new job. Consistency in your work history is a positive thing to banks and other lenders. Changing jobs may not compromise your ability to qualify for a loan - especially if you are improving your salary. However, if you switch careers before approval, your mortgage process could fail or be bogged down.
Don't switch your accounts to a new bank or move around your cash. Bank statements from recent months for accounts in your name (checking, savings, money market, and other assets) will probably be reviewed as the lender makes decisions regarding your application. The lending institution will need to see a steady flow of your money each month, in order to avoid fraud. Changing banks or moving finances to another account - for whatever reason - may hinder the review of your accounts.
Don't give a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Your good faith deposit does not belong to the seller: it is actually yours until the transaction is final. Some FSBO sellers may not know that these good faith funds must be applied to your expenses upon closing. It's advisable to put the deposit into a trust account, or get an attorney to hold it until the deal closes. Your contract should document who keeps the money if the transaction does not go through.
At First Southeast Mortgage Corporation, we answer questions about this process every day. Call us: 954.920.9799.