What to Avoid During a Home Purchase
With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of taking their enthusiasm straight to the mall or furniture store. Keep in mind that until your keys are in hand, your lender is watching your accounts very closely. We have listed some things below you will want to stay away from when waiting for your loan to close.
Don't buy big-ticket items. Although you will be dreaming of ways to turn your new home into a castle, try to stay away from major purchases like appliances, electronics, or furniture. We also recommend that you avoid vacations and vehicle purchases until the closing of your loan. Your lender may send up red flags if you purchase new appliances on your credit cards in the middle of your loan process. Using cash to purchase big-ticket items can also be a bad idea: most banks look at your available cash when approving your mortgage.
Don't get a new career. Lenders feel comfortable seeing a consistent career history on your application. Finding a new career (particularly one with a better paycheck) may not change your ability to qualify for a loan. However, if you switch careers before you qualify, your loan process could fail or be stalled.
Don't move cash around or switch banks. Your lender will require you to provide recent bank statements of all of your accounts: checking, savings, money market, and other assets. To detect potential fraud, most lenders require a thorough paper trail to verify the source of all cash. No matter the reason, changing banks or moving funds from one account to another may raise a red flag with the lender and slow down your loan process.
Don't deliver earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your good faith deposit does not belong to the seller: it remains yours until the sale closes. Although your seller might not realize this, any good faith money should be applied to your closing expenses. An attorney or other type of neutral party can hang onto your earnest funds, or you may put them temporarily into a trust account until you close. Should your home purchase fail, your contract with the seller should indicate where the good faith funds should go.
Firelight Mortgage Consultants can answer questions about these "Don'ts" and many others. Give us a call: 3032282254.