What to Avoid During your Home Purchase
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Many 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 loan is approved. Keep in mind that until your keys are in hand, your lender is watching you very closely. Below you'll find a list of things to stay away from during this crucial time of your home purchase.
Don't buy 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 expensive purchases like furniture, cars, appliances, or vacations until the loan closes. You may send up red flags with your lender if you finance your furniture on your credit cards during your loan process. Because lending institutions are reviewing your financial accounts, a large cash purchase is also not advised.
Don't look for a new job. Consistency in your job history is a good thing to lenders. Getting a new career before you apply for a mortgage may not get in the way of your approval at all. But for some people, changing careers during the loan approval process may raise concern and stymie your approval.
Don't move money around or switch banks. While the lending institution considers your mortgage loan application, you will probably be asked to produce bank statements for recent months on your checking and savings accounts, money market accounts and other liquid finances. To eliminate fraud, lenders want to see clear documentation of how you earn your living and where additional money comes from. Switching banks or moving finances elsewhere - no matter the reason - may make it harder for the lender to review your funds.
Don't give funds directly to your seller (usually in cases of "for sale by owner") for a "good faith" deposit. Your good faith money does not belong to the seller: it remains yours until the sale closes. The good faith money is to go toward your expenses upon closing; your individual seller may not realize this. An attorney or other type of neutral party can hold onto your funds, or you may put them temporarily into a trust account until you close. If your transaction fails, your contract with the seller should dictate to whom this good faith funds should go.
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