Things to Avoid While Buying a Home
Some new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller says "yes" and the loan is approved. Keep in mind that until your keys are in hand, your lender is watching your finances very closely. Below you'll find a list of things to stay away from during this crucial time of your home purchase.
Don't empty your wallet on big-ticket items It may be tempting to order that new couch for the soon-to-be-yours den, but it's advisable to avoid making large buys like furniture, appliances, jewelry, or vacations until closing. Using credit cards to buy furniture could compromise your lending process by changing your numbers dramatically. Because lending institutions are examining your financial accounts, a large cash purchase is also a bad idea.
Don't go on a job search. Your recent work history should show consistency. Getting a new job before you apply for a mortgage may not jeopardize your approval at all. But for some, changing jobs during the mortgage application process may raise concern and hinder your application.
Don't change banks or move cash around in your bank accounts. Bank statements from recent months for accounts in your name (savings, checking, money market, and other assets) will be reviewed as the lender makes decisions regarding your approval. To avoid fraud, lenders need clear documentation of how you earn your living and where any additional money comes from. No matter the purpose, moving banks or moving funds from one account to another could raise a red flag with your lender and impede your application process.
Don't give funds directly to your seller (commonly in cases of "for sale by owner") to be considered a "good faith" deposit. Until closing, the earnest money remains yours. Some FSBO sellers might not know that your good faith money must go toward your expenses at closing. Get an attorney or other neutral party who will hold the deposit or place it in a trust account until closing. The disposition of earnest money, if your home purchase falls through, should be documented in the contract with the seller.
Your Equity Services can answer questions about these "Don'ts" and many others. Give us a call: 425-392-2295.