Things to Avoid While Buying a Home
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Lots of new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller says "yes" and the lender approves their loan. There are still a few major hurdles to jump before your loan closes. Here are some actions to avoid during the home buying process to be sure your transaction goes smoothly.
Don't buy luxury items. You may be itching to buy that new easy-chair for the soon-to-be-yours living room, but it's best to stay away from making large buys like furniture, appliances, electronic equipment, or vacations until your home loan closes. Your lender may send up red flags if you purchase your appliances on your credit cards during your loan process. Using cash to buy expensive items can also be a bad idea: many lenders take into consideration your cash on hand when approving your application.
Don't go job hunting. Stability in your career history is a good thing to banks and other lenders. Finding a new job (especially one with a better paycheck) may not affect your ability to qualify for your mortgage loan. However, if you switch careers before you qualify, your mortgage process could fail or be stalled.
Don't take your accounts to a new bank or move around your cash. As your lending institution considers your loan application, you will probably be instructed to produce bank statements for recent months on your saving and checking accounts, money market accounts and other liquid assets. The lender looks for a steady flow of your funds each month, in order to avoid fraud. Even for practical purposes, transferring funds or switching banks could make it difficult for the lender to confirm your account history.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, delivered to his door. As a rule, your good faith money belongs to you, not the seller until the sale is final. The FSBO seller may not realize that the good faith money must go toward your expenses upon closing. Get a lawyer or other neutral party who is able to hang on to the deposit or place it in a trust account until you close. The contract should document to whom the money goes if the home purchase falls through.
Leatherstocking Group, Inc. can walk you through the pitfalls of getting a mortgage. Call us: 607-547-5007.