Things to Avoid While Purchasing a New Home
Many new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller accepts their offer and the loan is approved. It's best to remember that until closing, your lender is watching your finances very closely. Here are some things to avoid during the home buying process to assure the transaction goes smoothly.
Don't throw your money around. Although you will be dreaming of ways to turn your new house into a showplace, avoid big ticket purchases like appliances, electronics, or expensive furnishings. You will also want to avoid vacations and vehicle purchases until your loan closes. Your credit numbers could change suddenly if you make a huge purchase using plastic. Since lending institutions are looking closely at your financial accounts, a large cash purchase is also a mistake.
Don't look for a new job. Stability in your job history is a good thing to lenders. Changing jobs may not compromise your ability to qualify for a loan - particularly if you are going to be making more money. However, switching careers during your approval process might affect whether or not you are approved.
Don't move cash around or change banks. Bank statements from the last few months for all of your accounts (savings, checking, money market, and other assets) will probably be reviewed as the lending institution considers your application. To detect potential fraud, most lending institutions need a thorough paper trail to verify the source of all cash. No matter the reason, switching banks or moving money from one account to another could raise a red flag with the lender and impede your application process.
Don't give cash directly to your seller (commonly in cases of "for sale by owner") for a "good faith" deposit. Your good faith deposit does not belong to the seller: it remains yours until the sale closes. Although some FSBO sellers might not realize this, any good faith money should be used for the buyer's closing expenses. We recommend that you put the funds into a trust account, or get a neutral person, like an attorney to hold them until the closing of the sale. The contract should specify who gets the earnest funds if the transaction does not go through.
Longhorn Mortgage can answer questions about these "Don'ts" and many others. Call us: 512-302-9410.
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