Things to Avoid While Purchasing a New Home
Some new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller says "yes" and the lender approves their loan. There are still a few major hurdles to jump before closing. Below you'll find a list of actions to avoid during this crucial time of your home purchase.
Don't buy big-ticket items. You may be itching to order that new couch for the soon-to-be-yours den, but it's best to stay away from making large buys like furniture, appliances, jewelry, or cars until your home loan closes. You may send up red flags with your lender if you finance new appliances on your credit cards in the middle of your loan process. Using cash to buy expensive items can also create a mistake: many lenders take into consideration your cash on hand when approving your mortgage.
Don't get a new career. Consistency in your job history is a positive thing to lending institutions. Getting a new job may not affect your ability to qualify for a mortgage loan - particularly if you are going to be making more money. But in some cases, changing careers during the mortgage loan approval process might raise concern and stymie your approval.
Don't switch your accounts to a new bank or move around your money. While your lending institution reviews your mortgage loan application, you will likely be asked to submit bank statements for the last few months for your checking accounts, savings accounts, money market funds and other liquid finances. To eliminate fraud, lenders need clear documentation of how you earn your money and where any additional funds come from. Switching banks or transferring finances to another account - no matter the reason - may make it harder for your lender to verify your funds.
Don't give money directly to your seller (commonly in cases of "for sale by owner") for a "good faith" deposit. Until closing, the good faith money actually belongs to you. Your good faith money is to go toward your expenses upon closing; the individual seller may not understand this. Get an attorney or other neutral person who is able to hold the deposit or put it in a trust account until you close. Your contract should specify to whom the deposit goes if the home purchase does not go through.
At Nationwide Home Loans, we answer questions about this process every day. Call us at (562) 693-5048.