Things to Avoid While Purchasing a Home
Many new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller says "yes" and the lender approves their loan. There still remain a few major hurdles to jump before your loan closes. Below you'll find a list of things to avoid during this crucial time of your home purchase.
Don't empty your wallet on big-ticket items You may be itching to turn your new living room into a showplace, or celebrate your new dream home, but stay away from big purchases like furniture, cars, appliances, or vacations until your loan closes. Using credit cards to buy furniture could jeopardize your lending process by distorting your numbers. Because lenders are perusing your financial accounts, a large cash purchase is also a mistake.
Don't look for a new job. Your recent work history should show consistency. Getting a new career before you start the application process for a mortgage loan may not get in the way of your approval at all. However, switching careers during your approval process might affect your approval.
Don't take your accounts to a new bank or move around your cash. Your lending institution will require you to submit recent bank statements of your accounts: savings, checking, money market, and other assets. To detect potential fraud, most loans require a detailed paper trail to determine the source of all cash. No matter the purpose, switching banks or moving funds from one account to another may raise a red flag with the lender and slow down your application process.
Don't give cash directly to your seller (commonly in cases of "for sale by owner") to be used as a "good faith" deposit. Until the completion of the deal, the earnest money actually belongs to you. Your good faith money is to go toward your expenses upon closing; some sellers might not know this. Get a lawyer or other neutral party who is able to hold the funds or place them in a trust account until closing. If your sale falls through, your contract with the seller should indicate where this good faith deposit should go.
Community Trust Lending Team at Norcom Mortgage-NMLS ID#71655 can walk you through the pitfalls of getting a mortgage. Call us: (203) 526-9345.