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 carrying their enthusiasm straight to the mall or appliance store. There still remain a few major hurdles to jump before your loan closes. Here are some actions to avoid during the home buying process to assure the transaction goes well.
Don't buy big-ticket items. You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new castle, but keep away from expensive purchases like furniture, cars, appliances, or vacations until closing. Using credit cards to buy furniture could compromise your loan process by distorting your numbers. Using cash to purchase expensive items can even be a problem: many banks take into consideration your available cash when approving your application.
Don't go on a career search. Your recent job history should show stability. Finding a new career (particularly one with a better salary) may not jeopardize your ability to qualify for a mortgage. However, switching jobs during the approval process might influence your approval.
Don't move cash around or change banks. Bank statements from the last two or three months for all of your accounts (savings, checking, money market, and others) will be analyzed as the lender considers your approval. To eliminate potential fraud, most lending institutions require a detailed paper trail to verify the source of all incoming funds. No matter the reason, moving banks or moving money from one account to another could raise a red flag with the lender and slow down your approval process.
Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. Until the completion of the deal, the earnest money actually belongs to you. Your earnest money is to go toward your expenses closing; some sellers might not know this. 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. The final disposition of earnest money, in the case of a failed transaction, should be specified in the purchase agreement with the seller.
At Firelight Mortgage Consultants, we answer questions about this process every day. Call us: 3032282254.