Things to Avoid While Buying a New Home
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of carrying their enthusiasm straight to the mall or appliance store. Until the keys are handed over, there are still some hoops to jump through. Below you'll find a list of actions to avoid during this crucial time of your home purchase.
Don't throw your money around. Although you may be listing ways to turn your new home into a showplace, avoid big ticket purchases like appliances, electronics, or furniture. We also recommend that you avoid vacations and vehicle purchases until your 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. It's also a red flag to make those big purchases with cash. Lenders are looking at your cash reserve when considering your loan.
Don't look for a new career. Lending Institutions look for a consistent job history on your paperwork. Finding a new job (particularly one with a better paycheck) may not jeopardize your ability to qualify for your mortgage. However, if you switch careers before approval, your process could fail or be stalled.
Don't switch banks or move money around in your bank accounts. Bank statements from the last few months for accounts in your name (savings, checking, money market, and other assets) will probably be analyzed as the lending institution considers your application. The lending institution is looking for a steady flow of your money each pay period, in the interest of avoiding fraud. No matter the purpose, switching banks or moving funds from one account to another may raise a red flag with your lender and slow down your loan process.
Don't give funds directly to your seller (usually in cases of "for sale by owner") to be considered a "good faith" deposit. Your good faith deposit does not belong to the seller: it remains yours until closing. Although some individual sellers might not know this, the good faith money should go toward your closing expenses. Get an attorney or other neutral party who will hang on to the funds or put them in a trust account until you close. The disposition of good faith money, in the case of a failed transaction, should be specified in the purchase agreement with your seller.
Real Property Finance can answer questions about these "Don'ts" and many others. Call us at 310-379-5997.
Looking to Buy?
Are you looking to buy a house? Let us help you. Just fill out as much of the information below that you want and we'll get right back to you, with no obligation to you. We guarantee your privacy.