Things to Avoid While Purchasing a New Home
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In the rush of excitement that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of carrying their enthusiasm straight to the mall or furniture store. There still remain a few major hurdles to jump before the house is really yours. We have given you a list of things below you will want to avoid when waiting for your loan to close.
Don't overspend on big-ticket items You may be itching to order that new Turkish rug for the soon-to-be-yours den, but it's advisable to stay away from making big ticket buys like furniture, appliances, jewelry, or vacations until your home loan closes. Financing new bedroom furniture with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. Using cash to purchase big items can also create an issue: many banks take into consideration your available cash when approving your application.
Don't get a new career. Your recent work history should show stability. Getting a new job may not jeopardize your ability to qualify for a mortgage loan - particularly if you are going to be making more money. However, if you switch careers before approval, your loan process could fail or be stalled.
Don't change banks or move money around in your accounts. While the lender reviews your loan package, you will likely be asked to produce bank statements for recent months for your saving and checking accounts, money market funds and other liquid wealth. To eliminate potential fraud, most lenders want a thorough paper trail to determine the source of all funds. Even for innocent purposes, moving around money or changing banks could make it more difficult for your lending institution to confirm your bank history.
Don't give cash directly to your seller (commonly in cases of "for sale by owner") to be considered earnest money. Until closing, any earnest money actually belongs to you. Some FSBO sellers might not know that your earnest money should be applied to your expenses at closing. It's best to deposit the funds with the closing agent, or get an attorney to hold it until closing. The purchase agreement should dictate where the deposit goes if the home purchase fails.
At Mortgage Solutions of Central Florida, Inc., we answer questions about this process every day. Call us: (407) 294-4707.