What to Avoid During a Home Purchase
With the thrill that comes with an accepted offer and a "yes" from the lender, some 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 crucial time of your home purchase.
Don't make expensive purchases. Although you may be planning ways to turn your new home into a showplace, try to stay away from major purchases like appliances, electronics, or furniture. You will also want to avoid vacations and vehicle purchases until the closing of your loan. Your lender may send up red flags if you purchase your furniture on your credit cards in the middle of your loan process. Using cash to buy big-ticket items can even be an issue: many lending institutions take into consideration your available cash when approving your loan.
Don't get a new job. Your recent work history should show consistency. Getting a new job may not jeopardize your ability to qualify for a mortgage loan - especially if you are getting a bigger paycheck. However, if you switch careers before your loan is approved, your process could fail or be stalled.
Don't move cash around or switch banks. Most lenders will ask for recent bank statements on all of your accounts: checking, savings, money market, and other liquid assets. To detect potential fraud, most lending institutions want thorough paperwork to determine the source of all incoming funds. No matter the reason, changing banks or moving funds from one account to another may raise a red flag with your lender and slow down your application process.
Don't give your FSBO (for sale by owner) seller earnest money, delivered to his door. Your good faith money does not belong to the seller: it is actually yours until closing. The good faith money is to be applied to your expenses closing; some FSBO sellers may not understand this. A neutral party, like an attorney can hold onto your deposit, or you may put it temporarily into a trust account until closing. The disposition of good faith funds, in the case of a failed transaction, should be written in the purchase agreement with your seller.
At 1st Credential Mortgage Inc, we answer questions about this process every day. Give us a call at (281) 778-0805.