Things to Avoid While Purchasing a New Home
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Some new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller accepts their offer and the lender approves their loan. There are still a few major hurdles to jump before the keys are handed over. Below you'll find a list of actions 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 kitchen into a home magazine cover, or celebrate your new castle, but keep away from major purchases like furniture, cars, appliances, or vacations until closing. Your lender may send up red flags if you finance new appliances on your credit cards in the middle of your loan process. Because lenders are looking closely at your financial accounts, a large cash purchase is also not advised.
Don't get a new job. Consistency in your work history is a positive thing to lenders. Finding a new job (especially one with a better paycheck) may not affect your ability to qualify for your mortgage. However, if you switch careers before you qualify, your loan process could fail or be stalled.
Don't move finances around or switch banks. While your lender considers your loan application, you will probably be instructed to produce bank statements for the last two or three months for your checking and savings accounts, money market funds and other liquid assets. The lending institution looks for a consistent rise and fall of your money each month, in the interest of ruling out fraud. Even for innocent purposes, moving around finances or changing banks could make it more difficult for your lending institution to verify your bank history.
Don't give cash directly to your seller (generally in the case of of "for sale by owner") to be used as a "good faith" deposit. As a rule, your earnest money is yours, not the seller's until closing. Although your FSBO seller may not know this, the earnest money should go toward the buyer's closing expenses. Get a lawyer or other neutral person who is able to hang on to the funds or place them in a trust account until you close. Should your sale fall through, your contract with the seller should specify where this earnest money should go.
Keypoint Mortgage can answer questions about these "Don'ts" and many others. Call us at 201-998-9050.
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