Things to Avoid While Buying a New Home
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In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of carrying their enthusiasm straight to the mall or appliance store. Until the house is really yours, there still remain some hurdles to jump. Here are some things to stay clear of before closing to be sure your transaction goes well.
Don't buy non-essential items. You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new dream home, but keep away from expensive purchases like furniture, jewelry, appliances, cars, new credit lines of any kind, or vacations until your loan closes. You may send up red flags with your lender if you buy new furniture on your credit cards in the middle of your loan process. It's even a red flag to make those big purchases using cash. Lenders are examining your cash on hand when considering your loan.
Don't look for a new career. Consistency in your job history is a positive thing to lending institutions. Getting a new job may not jeopardize your ability to qualify for a mortgage loan - especially if you are getting a better salary. However, if you switch careers before approval, your process could fail or be slowed down. Additionally you'll usually need 30 days pay stubs on the new job before you can close on the new home.
Don't move finances around or change banks. Bank statements from the last few months for accounts in your name (savings, checking, money market, and other assets) will be analyzed as the lending institution considers your application. To eliminate potential fraud, most lenders need a thorough paper trail to determine the source of all funds. Switching banks or moving money to another account - no matter the reason - might hinder the review of your accounts and create extra paperwork for you.
Don't give your FSBO (for sale by owner) seller earnest money, delivered to his door. Until closing, any good faith deposit (known as earnest money) actually belongs to you. Your seller may not know that any earnest money must be used for your expenses at closing. Find an attorney or other neutral party (usually a title company) who can hold the funds or place them in a trust account until closing. Should your home purchase fail, the purchase agreement should document where this good faith deposit should go.
Ann Jones can walk you through the pitfalls of getting a mortgage. Call us at (512) 422-9036.
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