Things to avoid before buying a home
Many new homebuyers make the mistake
of rushing out to buy things to fill their home
with as soon as the seller accepts their
purchase offer and the lender pre-approves
their loan. But there are still a few major
hurdles to overcome before the keys are
handed out. Here are some things to avoid
during the home buying process to assure
your transaction goes as smoothly as
possible:
- Dont make an expensive purchase. It may be tempting to order that new sofa for
your soon-to-be living room, but its best to avoid making major purchases like
furniture, cars, appliances, electronic equipment, jewelry, or vacations until after
the closing. Financing that furniture with a store credit card or even one of your
own credit cards could jeopardize your credit worthiness during the time it
means the most. Using cash to purchase big items can also create a problem
because many banks take into consideration your cash reserve when approving
your mortgage.
- Dont get a new job. Lenders like to see a consistent job history. Generally,
changing jobs will not affect your ability to qualify for a mortgage loan - especially
if you are going to be making more money. But for some people, getting a new
job during the loan approval process could raise some concern and affect your
application.
- Dont switch banks or move money around. As your lender reviews your loan
package, you will likely be asked to provide bank statements for the last two or
three months on your checking accounts, savings accounts, money market
funds and other liquid assets. To eliminate potential fraud, most loans require a
thorough paper trail to document the source of all funds. Changing banks or
transferring money to another account - even if its just to consolidate funds -
could make it difficult for the lender to document your funds.
- Don't give a good faith deposit directly to the seller in a For Sale By Owner
(FSBO) purchase. As a rule, your good faith deposit belongs to you, not to the
seller, until the deal closes. Your FSBO seller may not know that your good faith
funds should be applied to your expenses at closing. Get an attorney or other
neutral party who can hold the deposit or put it in a trust account until you close
on the home. Your purchase contract should dictate to whom the funds go
should the transaction fall through.
- Don't disregard your lenders requirements. You may have been pre-approved
for the loan but your work with the lender is far from over. In order to process
your loan, you need to meet certain requirements. Your lender will need copies
of your bank statements, W2s and other paperwork. It is up to you to get it to him
or her as soon as possible. Failure to submit certain qualifying documents
could cause you to lose your loan and the financing you need to buy your home.
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