Things to Avoid While Buying a New Home

Many new homebuyers 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 the loan. There are still a few major hurdles to jump before the keys are handed over. We have listed some things below you will want to stay away from when waiting for closing.

Don't buy big-ticket items. You may be tempted to order that new sofa for the soon-to-be-yours living room, but it's advisable to avoid making big ticket purchases like furniture, appliances, jewelry, or cars until closing. Financing new bedroom furniture with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. Using cash to buy big-ticket items can even create a problem: many banks look at your cash reserve when approving your mortgage.

Don't look for a new career. Your recent job history should show stability. Getting a new career before you start the application process for a mortgage loan may not compromise your approval at all. However, switching careers in the middle of your application process may affect whether or not you are approved.

Don't switch banks or move cash around in your accounts. As your lender reviews your mortgage package, you will probably be required to provide bank statements for the last two or three months for your checking and savings accounts, money market funds and other liquid wealth. Your lending institution is looking for a consistent flow of your money each month, in order to avoid fraud. No matter the reason, changing banks or moving money from one account to another may raise a red flag with your lender and slow your qualification process.

Don't give cash directly to your seller (generally in cases of "for sale by owner") for earnest money. As a rule, your good faith money belongs to you, not the seller up until the sale is final. Your seller might not know that any good faith funds is to go toward your expenses upon closing. An attorney or other type of neutral party can hold onto your deposit, or you may put it temporarily into a trust account until closing. If your sale falls through, the purchase contract should document to whom your earnest money should go.

Financial Edge Mortgage Corp. can answer questions about these "Don'ts" and many others. Call us at 425-508-9988.

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