Things to Avoid While Purchasing a New Home
Many 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. Until your loan closes, there still remain some hurdles to jump. We have listed some actions below you will want to avoid when waiting for your loan to close.
Don't empty your wallet on big-ticket items You may be itching to buy that new sofa for the soon-to-be-yours living room, but it's best to avoid making major purchases like furniture, appliances, electronic equipment, or cars until your home loan closes. You may send up red flags with your lender if you purchase new electronics on your credit cards during your loan process. Using cash to buy big items can even create an issue: many lending institutions consider your cash on hand when approving your loan.
Don't look for a new job. Your recent work history should show stability. Finding a new career (especially one with a bigger paycheck) may not affect your ability to qualify for your mortgage. However, if you switch careers before approval, your loan process could fail or be bogged down.
Don't move cash around or switch banks. While the lending institution reviews your mortgage application, you will likely be instructed to provide bank statements for recent months on your checking accounts, savings accounts, money market accounts and other liquid assets. To eliminate fraud, lenders look for a consistent portrayal of how you earn your living and where additional money comes from. Changing banks or transferring funds elsewhere - no matter the reason - might hinder the review of your accounts.
Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your earnest money is yours, not the seller's until closing. Any earnest funds are to be used for your expenses upon closing; some individual sellers might not understand this. We recommend that you put the funds into a trust account, or get an attorney to hold them until the deal closes. The contract should specify who gets the deposit if the home purchase fails.
At VSI Home Lending, we answer questions about this process every day. Give us a call at (260) 338-2561.