What Not to Do When 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 error of taking their excitement straight to the mall or furniture store. There still remain a few major hurdles to jump before the house is really yours. Here are some actions to avoid during the home buying process to assure the transaction goes well.
Don't overspend on big-ticket items You may be itching to buy that new entertainment center for the soon-to-be-yours family room, but it's best to stay away from making major buys like furniture, appliances, electronic equipment, or vacations until your home loan closes. Your lender may send up red flags if you purchase your electronics on your credit cards during your loan process. Using cash to buy expensive items can even create a bad idea: many banks take into consideration your cash reserve when approving your application.
Don't look for a new job Lenders look for a consistent work history on your paperwork. Finding a new job (particularly one with a bigger paycheck) may not change your ability to qualify for a mortgage. But for some, getting a new career during the mortgage loan approval process could bring concern and hinder your approval.
Don't move cash around or switch banks. While your lender considers your loan application, you will probably be instructed to provide bank statements for recent months on your saving and checking accounts, money market accounts and other liquid wealth. To eliminate potential fraud, most loans need a thorough paper trail to determine the source of all cash. Even for practical purposes, transferring finances or switching banks could make it difficult for your lender to verify your account history.
Don't give cash directly to your seller (commonly in cases of "for sale by owner") to be considered a "good faith" deposit. Until the completion of the deal, the good faith money remains yours. Some sellers might not know that any good faith funds must be used for your expenses at closing. Find a lawyer or other neutral person who will hold the money or place it in a trust account until you close. The purchase agreement should dictate to whom the funds go if the transaction fails.
At The Elite Lending Team at Inlet Mortgage Corporation, we answer questions about this process every day. Give us a call at 561-575-5626.