Don't Trip Yourself up While Buying a New Home
With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of taking their enthusiasm straight to the mall or furniture store. Keep in mind that until closing, your lender is watching your accounts very closely. Below you'll find a list of things to stay away from during this crucial time of your home purchase.
Don't buy luxury items. It may be tempting to buy that new Turkish rug for the soon-to-be-yours living room, but it's advisable to avoid making big ticket purchases like furniture, appliances, jewelry, or cars until your home loan closes. Your lender may send up red flags if you finance new appliances on your credit cards in the middle of your loan process. It's even a bad idea to make those huge purchases with cash. Lending Institutions are examining your cash on hand when considering your loan.
Don't go on a career search. Your recent job history should show stability. Getting a new job may not affect your ability to qualify for a mortgage loan - particularly if you are improving your salary. But for some people, switching jobs during the mortgage approval process might raise concern and stymie your approval.
Don't take your accounts to a new bank or move around your finances. While the lender considers your mortgage application, you will likely be required to submit bank statements for the last few months for your checking accounts, savings accounts, money market funds and other liquid assets. Your lending institution looks for a consistent flow of your money over the pay period, in order to avoid fraud. No matter the reason, changing banks or moving funds from one account to another can raise a red flag with your lender and slow your approval process.
Don't give cash directly to your seller (commonly in the case of of "for sale by owner") for earnest money. Until closing, the good faith money actually belongs to you. Your good faith money is to be applied to your expenses closing; some individual sellers might not understand this. We recommend that you put the money into a trust account, or get a neutral party, like a lawyer, to hold it until the closing of the sale. The purchase contract should specify who keeps the deposit if the home purchase does not go through.
Cornerstone Home Mortgage can answer questions about these "Don'ts" and many others. Give us a call at 360-570-0106.