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 mistake of taking their enthusiasm straight to the mall or furniture store. There are still a few major hurdles to jump before the keys are handed over. Below you'll find a list of actions to avoid during this crucial time of your home purchase.
Don't throw your money around. Although you will be planning ways to turn your new home into a castle, avoid big ticket purchases like appliances, electronics, or furniture. We also recommend that you avoid vacations and vehicle purchases until your loan closes. Financing your bedroom furniture with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. Since lenders are examining your financial accounts, a large cash purchase is also not advised.
Don't look for a new career. Consistency in your work history is a good thing to banks and other lenders. Getting a new job may not jeopardize your ability to qualify for a loan - particularly if you are going to be making more money. However, if you switch careers before your loan is approved, your process could fail or be bogged down.
Don't move cash around or switch banks. Bank statements from recent months for all of your accounts (savings, checking, money market, and others) will likely be analyzed as the lending institution considers your loan application. Your lending institution looks for a steady flow of your money over the month, in the interest of avoiding fraud. Even for innocent reasons, moving around cash or switching banks may make it harder for your lender to document your bank history.
Don't give a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Your earnest money does not belong to the seller: it remains yours until closing. Although some individual sellers might not know this, any good faith money should go toward your closing expenses. Find a lawyer or other neutral party who will hang on to the money or put it in a trust account until closing. The final disposition of earnest money, in the case of a failed transaction, should be indicated in the contract with your seller.
At Advantage Home Lenders, we answer questions about this process every day. Give us a call: 6317360419.