What to Avoid During your Home Purchase
Some new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller says "yes" and the loan is approved. There still remain a few major hurdles to jump before closing. Here are some things to avoid before closing to assure your transaction goes well.
Don't buy big-ticket items. Although you will be listing ways to turn your new house into a castle, try to stay away from big ticket purchases like appliances, electronics, or furniture. You will also want to stay away from vacations and car purchases until your loan closes. You may send up red flags with your lender if you finance new electronics on your credit cards during your loan process. It's also a mistake to make those huge purchases using cash. Lenders are looking at your cash on hand when considering your loan.
Don't look for a new career. Stability in your work history is a good thing to lenders. Getting a new career before you apply for a mortgage loan may not jeopardize your approval at all. However, if you switch careers before approval, your process could fail or be slowed down.
Don't switch your accounts to a new bank or move around your money. Bank statements from recent months for your accounts (savings, checking, money market, and others) will be reviewed as the lender considers your loan application. The lender hopes to see a consistent flow of your funds each pay period, in order to avoid fraud. Even for innocent reasons, transferring money or switching banks may make it harder for the lending institution to document your bank history.
Don't give funds directly to your seller (generally in cases of "for sale by owner") for earnest money. As a rule, your earnest money is yours, not the seller's until the deal closes. Although some individual sellers may not realize this, the good faith funds must go toward your closing expenses. Find a lawyer or other neutral party who can hang on to the deposit or place it in a trust account until closing. The purchase agreement should dictate who keeps the money if the transaction does not go through.
Alternative Mortgage Group can answer questions about these "Don'ts" and many others. Give us a call: 561-395-4264.