What to Avoid During your Home Purchase
In the rush of excitement 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. There are still a few major hurdles to jump before the house is realy yours. Below you'll find a list of actions to avoid during this critical time of your home purchase.
Don't buy big-ticket items. You may be tempted to buy that new couch for the soon-to-be-yours den, but it's best to stay away from making major purchases like furniture, appliances, jewelry, or cars until your home loan closes. Financing new stainless steel appliances 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 also be a bad idea: many banks take into consideration your cash reserve when approving your loan.
Don't look for a new career. Consistency in your work history is a positive thing to lenders. Finding a new career (especially one with a better salary) may not change your ability to qualify for your mortgage loan. However, finding a new career in the middle of the loan process could influence whether or not you are approved.
Don't move cash around or switch banks. Bank statements from the last few months for all of your accounts (savings, checking, money market, and other assets) will be analyzed as the lending institution considers your application. To detect potential fraud, most loans need a thorough paper trail to document the source of all funds. Changing banks or transferring finances elsewhere - no matter the purpose - could make it harder for your lender to review your funds.
Don't give a "good faith" deposit 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 FSBO seller might not understand this, the good faith funds should be applied to the buyer's closing expenses. Get a lawyer or other neutral party who is able to hang on to the funds or put them in a trust account until closing. The disposition of earnest money, in the case of a failed transaction, should be included in the contract with the seller.
Firelight Mortgage Consultants can walk you through the pitfalls of getting a mortgage. Give us a call at 3032282254.