Things to Avoid While Buying a New Home
Some new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller accepts their offer and the lender approves the loan. Keep in mind that until your keys are in hand, your lender is watching your finances very closely. Here are some things to avoid before closing to be sure your transaction goes smoothly.
Don't overspend on big-ticket items Although you will be dreaming of ways to turn your new house into a showplace, try to stay away from major purchases like appliances, electronics, or expensive furnishings. You will also want to avoid vacations and vehicle purchases until the closing of your loan. Financing your Plasma TVs with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. Since lenders are looking closely at your bank accounts, a large cash purchase is also not advised.
Don't get a new career. Consistency in your career history is a good thing to lenders. Getting a new career before you apply for a mortgage may not compromise your approval at all. However, switching careers in the middle of the loan process might affect your approval.
Don't change banks or move cash around in your bank accounts. Most lenders will instruct the submission of recent bank statements on all of your accounts: checking, savings, money market, and other assets. The lender is looking for a steady flow of your money each month, in the interest of ruling out fraud. Even for practical purposes, transferring finances or switching banks might make it more difficult for the lender to confirm your bank history.
Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith money is yours, not the seller's up until the deal closes. Although some FSBO sellers may not realize this, the earnest money should be used for the buyer's closing expenses. We recommend that you put the funds into a trust account, or get an attorney to hold them until the closing of the sale. The disposition of good faith funds, in the case of a failed transaction, should be indicated in the purchase agreement with the seller.
At Utah Funding, we answer questions about this process every day. Call us: (949) 486-3777.