What to Avoid During a Home Purchase
Some new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller accepts their offer and the lender approves the loan. Keep in mind that until closing, your lender is watching your accounts very closely. Below you'll find a list of things to avoid during this critical time of your home purchase.
Don't overspend on big-ticket items You may be itching to turn your new living room into a showplace, or celebrate your new castle, but stay away from expensive purchases like furniture, cars, appliances, or vacations until closing. You may send up red flags with your lender if you buy new electronics on your credit cards in the middle of your loan process. It's also a red flag to make those large purchases using cash. Lending Institutions are examining your cash on hand when considering your loan.
Don't get a new job. Consistency in your career history is a positive thing to lending institutions. Getting a new job may not affect your ability to qualify for a loan - particularly if you are going to be making more money. However, if you switch careers before you qualify, your loan process could fail or be bogged down.
Don't take your accounts to a new bank or move around your finances. As the lender considers your mortgage application, you will probably be instructed to provide bank statements for the last few months for your checking and savings accounts, money market funds and other liquid finances. To detect potential fraud, most lending institutions want a detailed paper trail to determine the source of all funds. No matter the reason, moving banks or transferring money may raise a red flag with your lender and slow down your approval process.
Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. Until the sale is complete, the good faith deposit actually belongs to you. The earnest money is to be applied to your expenses upon closing; the FSBO seller might not know this. An attorney or other type of neutral party can hold your funds, or you may put them temporarily into a trust account until closing. Should your home purchase fail, the contract with the seller should document to whom your earnest money should go.
At Americn Hero Mortgage, we answer questions about this process every day. Call us: 754-202-4376.