What Not to Do When Buying a New Home
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Many new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller accepts their offer and the loan is approved. There are still 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 overspend on big-ticket items Although you may be dreaming of ways to turn your new home into a showplace, avoid big ticket purchases like appliances, electronics, or furniture. You will also want to avoid vacations and car purchases until the closing of your loan. Your lender may send up red flags if you finance your electronics on your credit cards in the middle of your loan process. It's also a mistake to make those large purchases using cash. Lending Institutions are looking at your available cash when considering your loan.
Don't go on a career hunt. Lending Institutions look for a consistent job history on your application. Changing jobs may not compromise your ability to qualify for a loan - particularly if you are going to be making more money. However, getting a new job in the middle of your application process may influence whether or not you are approved.
Don't switch banks or move finances around in your bank accounts. As your lending institution reviews your mortgage application, you will likely be asked to submit bank statements for the last two or three months on your checking and savings accounts, money market accounts and other liquid finances. The lender looks for a consistent flow of your money each pay period, in the interest of avoiding fraud. No matter the purpose, moving banks or transferring money can raise a red flag with the lender and impede your loan process.
Don't give funds directly to your seller (usually in cases of "for sale by owner") to be used as a "good faith" deposit. Until the completion of the deal, any good faith money actually belongs to you. The good faith money is to be applied to your expenses upon closing; a individual seller might not know this. A neutral party, like an attorney can hold your funds, or you may put them temporarily into a trust account until you close. The purchase agreement should document to whom the funds go if the home purchase does not go through.
eCU Mortgage can answer questions about these "Don'ts" and many others. Call us at 713-676-5255.