Things to Avoid While Buying a New Home
What's more fun than buying a bunch of new furniture to go in your future home? Nothing. But buying big ticket items before your loan closes could be trouble. Until your keys are in hand, there still remain some hurdles to jump. Here are some actions to refrain from before closing to be sure your transaction goes smoothly.
Don't buy big-ticket items. Although you may be dreaming of ways to turn your new home into a showplace, try to stay away from major purchases like appliances, electronics, or furniture. You will also want to avoid vacations and vehicle purchases until the closing of your loan. Using credit cards to buy furniture could compromise your loan process by distorting your numbers. It's even a red flag to make those big-ticket purchases using cash. Lenders are examining your available cash when considering your loan.
Don't look for a new career. Your recent career history should show consistency. Finding a new job (especially one with a bump in salary) may not affect your ability to qualify for a loan. But in some cases, changing careers during the loan approval process could bring concern and stymie your application.
Don't change banks or move cash around in your bank accounts. Most lenders will require you to produce recent bank statements for accounts in your name: checking, savings, money market, and other liquid assets. To avoid potential fraud, most lenders require a thorough paper trail to determine the source of all incoming funds. Even for practical reasons, moving around funds or switching banks may make it harder for your lender to confirm your bank history.
Don't give funds directly to your seller (generally in cases of "for sale by owner") to be used as earnest money. Until the completion of the deal, the good faith money actually belongs to you. The earnest money is to go toward your expenses upon closing; some individual sellers may not understand this. Get a lawyer or other neutral person who can hold the money or put it in a trust account until you close. Your contract should indicate who gets the earnest funds if the home purchase does not go through.
Executive Lending Group can answer questions about these "Don'ts" and many others. Give us a call at (405) 822-1957.