to Avoid While Buying Your 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:
Don't make an expensive purchase and don't apply for any
new credit. 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
Don't change careers (and if possible, stay in your current
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.
Don't 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
Don't give a good faith deposit directly to the FSBO (or
any other) seller in a 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 escrow attorney--or
ideally a title company--to hold the deposit in a trust account
until you close on the home. Your good faith deposit (or earnest
money check) should be made out to the title company or trust account.
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.