Things to Avoid While Buying a New Home

Some new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller says "yes" and the loan is approved. There still remain a few major hurdles to jump before your loan closes. We have given you a list of actions below we suggest you avoid when waiting for closing.

Don't empty your wallet on big-ticket items You may be tempted to buy that new sofa for the soon-to-be-yours parlor, but it's advisable to avoid making large purchases like furniture, appliances, jewelry, or cars until your home loan closes. Your lender may send up red flags if you buy your furniture on your credit cards during your loan process. Since lending institutions are looking closely at your bank accounts, a large cash purchase is also a bad idea.

Don't look for a new job. Stability in your career history is a good thing to lending institutions. Changing jobs may not affect your ability to qualify for a loan - especially if you are getting a better salary. However, if you switch careers before your loan is approved, your process could fail or be stalled.

Don't switch your accounts to a new bank or move around your finances. Your lending institution will ask for recent bank statements on your accounts: checking, savings, money market, and other liquid assets. To detect fraud, lenders require a consistent portrayal of how you earn your living and where any additional money comes from. Even for practical purposes, transferring money or switching banks could make it difficult for the lending institution to document your account history.

Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. Until closing, any earnest money actually belongs to you. Although some individual sellers may not realize this, the earnest money must go toward your closing expenses. Find a lawyer or other neutral party who can hang on to the funds or place them in a trust account until closing. The disposition of earnest money, in the case of a failed transaction, should be documented in the purchase agreement with your seller.

At Foxfield Financial, we answer questions about this process every day. Give us a call at 7205988300.