Things to Avoid While Purchasing a New Home
Some new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller says "yes" and the loan is approved. Keep in mind that until your keys are in hand, your lender is watching you very closely. We have listed some actions below you will want to stay away from when waiting for your loan to close.
Don't empty your wallet on big-ticket items Although you may be dreaming of ways to turn your new house into a castle, avoid major purchases like appliances, electronics, or furniture. We also recommend that you stay away from vacations and car purchases until your loan closes. Your credit numbers could change suddenly if you make a huge purchase using plastic. It's even a bad idea to make those large purchases using cash. Lending Institutions are looking at your cash reserve when considering your loan.
Don't get a new career. Consistency in your job history is a positive thing to lenders. Finding a new career (especially one with a bigger salary) may not affect your ability to qualify for your loan. But in some cases, changing jobs during the mortgage loan application process might raise concern and stymie your approval.
Don't change banks or move finances around in your accounts. Bank statements from the last two or three months for your accounts (checking, savings, money market, and other assets) will be studied as the lending institution makes decisions regarding your approval. To avoid fraud, lenders require clear documentation of how you earn your money and where additional wealth comes from. Switching banks or moving finances elsewhere - no matter the purpose - might hinder the documentation of your funds.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, made out directly to him. Until the sale is complete, the good faith money actually belongs to you. Any good faith funds are to go toward your expenses upon closing; some individual sellers may not know this. Get an attorney or other neutral person who will hold the money or place it in a trust account until closing. If your transaction fails, the purchase contract should specify to whom this earnest money should go.
Alerus Mortgage can answer questions about these "Don'ts" and many others. Give us a call: 952 417 8481.