What to Avoid During a Home Purchase
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, many homebuyers make the mistake of carrying their enthusiasm straight to the mall or appliance store. It's best to remember that until you get the keys, your lender is watching your finances very closely. We have listed some things below we suggest you avoid when waiting for closing.
Don't buy luxury items. You may be tempted to order that new easy-chair for the soon-to-be-yours living room, but it's best to stay away from making big ticket purchases like furniture, appliances, electronic equipment, or cars until closing. Your credit numbers could be altered suddenly if you purchase new furniture using credit cards. Using cash to purchase big items can even be a problem: most banks take into consideration your cash on hand when approving your application.
Don't go on a job search. Your recent job history should show consistency. Getting a new career before you apply for a loan may not get in the way of your approval at all. However, switching jobs during your loan process may affect your approval.
Don't change banks or move cash around in your accounts. While your lender reviews your loan application, you will probably be asked to provide bank statements for recent months for your checking accounts, savings accounts, money market funds and other liquid assets. Your lending institution hopes to see a steady flow of your funds each month, in order to avoid fraud. Switching banks or transferring funds to another account - no matter the reason - might hinder the documentation of 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 realize this, the good faith funds must be applied to your closing expenses. Get a lawyer or other neutral person who is able to hold the deposit or put it in a trust account until closing. The final disposition of earnest money, if your sale falls through, should be included in the contract with the seller.
Not Your Average Lender can walk you through the pitfalls of getting a mortgage. Give us a call at 9722039033.