What to Avoid During your Home Purchase
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Some new home buyers make the mistake of rushing out to buy things to fill their home as soon as the seller accepts their offer and the lender approves their loan. Until your keys are in hand, there are still some hurdles to jump. Here are some things to stay clear of before closing to be sure the transaction goes well.
Don't empty your wallet on big-ticket items Although you may be listing ways to turn your new house into a castle, try to stay away from major purchases like appliances, electronics, or furniture. You will also want to keep away from vacations and car purchases until the closing of your loan. Your lender may send up red flags if you buy new furniture on your credit cards during your loan process. Using cash to purchase big items can also create a problem: most banks consider your available cash when approving your loan.
Don't get a new job. Stability in your work history is a positive thing to lending institutions. Finding a new career (especially one with a better salary) may not hinder your ability to qualify for a mortgage. However, if you switch careers before your loan is approved, your process could fail or be slowed down.
Don't switch your accounts to a new bank or move around your finances. Bank statements from the last few months for accounts in your name (savings, checking, money market, and other assets) will likely be reviewed as the lender makes decisions regarding your loan application. To avoid potential fraud, most loans need detailed paperwork to verify the source of all funds. Even for innocent reasons, transferring money or changing banks may make it more difficult for the lender to confirm your account history.
Don't give funds directly to your seller (commonly in cases of "for sale by owner") to be considered a "good faith" deposit. Your good faith money does not belong to the seller: it is actually yours until closing. Some sellers might not know that the good faith funds is to go toward your expenses at closing. An attorney or other type of neutral party can hang onto your funds, or you may put them temporarily into a trust account until you close. Your contract should document to whom the deposit goes if the transaction falls through.
Cody and his staff answer questions about this process every day. Give us a call to discuss your loan needs today! In Austin call (512) 537-8000, or San Antonio (210) 702-3400.
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