Things to Avoid While Buying a Home
Some new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller accepts their offer and the lender approves their loan. There are still a few major hurdles to jump before the keys are handed over. Here are some actions to avoid during the home buying process to assure your transaction goes smoothly.
Don't overspend on big-ticket items Although you may be dreaming of ways to turn your new house into a castle, avoid major purchases like appliances, electronics, or expensive furnishings. We also recommend that you stay away from vacations and car purchases until your loan closes. Using plastic to buy furniture could compromise your lending process by changing your numbers dramatically. Since lending institutions are looking closely at your bank accounts, a large cash purchase is also a bad idea.
Don't get a new career. Consistency in your job history is a good thing to banks and other lenders. Changing jobs may not jeopardize your ability to qualify for a mortgage loan - particularly if you are going to be making more money. However, switching careers in the middle of the loan process may influence your approval.
Don't move money around or change banks. Your lending institution will ask for recent bank statements of accounts in your name: savings, checking, money market, and other liquid assets. The lending institution looks for a steady rise and fall of your funds each pay period, in order to avoid fraud. Even for practical reasons, moving around finances or changing banks could make it more difficult for your lender to document your bank history.
Don't give funds directly to your seller (usually in cases of "for sale by owner") to be used as a "good faith" deposit. As a rule, your good faith deposit belongs to you, not to the seller until closing. Although your FSBO seller may not understand this, your good faith funds should be used for your closing expenses. A neutral party, like an attorney can hang onto your earnest funds, or you may put them temporarily into a trust account until closing. Your purchase agreement should dictate who keeps the money if the home purchase fails.
At Alternative Mortgage Group, we answer questions about this process every day. Give us a call at 561-395-4264.