Don't Trip Yourself up While Buying your Home
Many new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller says "yes" and the lender approves the loan. Until your keys are in hand, there still remain some hurdles to jump. Below you'll find a list of actions to stay away from during this crucial time of your home purchase.
Don't overspend on big-ticket items You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new castle, but stay away from major purchases like furniture, cars, appliances, or vacations until the loan closes. Your lender may send up red flags if you buy your appliances on your credit cards during your loan process. Using cash to buy big-ticket items can even be a problem: most lending institutions consider your cash on hand when approving your loan.
Don't get a new career. Stability in your work history is a good thing to lenders. Finding a new career (particularly one with a bump in salary) may not affect your ability to qualify for a mortgage loan. However, if you switch careers before your loan is approved, your loan process could fail or be slowed down.
Don't move cash around or switch banks. As your lender considers your mortgage package, you will probably be instructed to produce bank statements for the last two or three months on your checking accounts, savings accounts, money market funds and other liquid finances. The lender hopes to see a steady flow of your money each month, in the interest of ruling out fraud. Even for practical reasons, transferring finances or switching banks may make it difficult for your lender to verify your account history.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. Your good faith deposit does not belong to the seller: it remains yours until the sale closes. Any good faith funds are to be used for your expenses upon closing; some FSBO sellers may not understand this. Get an attorney or other neutral person who will hang on to the funds or place them in a trust account until closing. The final disposition of good faith funds, in the case of a failed transaction, should be specified in the purchase agreement with the seller.
Saab Mortgage can answer questions about these "Don'ts" and many others. Call us: 703-288-0777.
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