What to Avoid During your 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 appliance store. Until closing, there still remain some hurdles to jump. Here are some actions to refrain from during the home buying process to assure the transaction goes smoothly.
Don't overspend on big-ticket items You may be itching to buy that new couch for the soon-to-be-yours living room, but it's advisable to stay away from making major purchases like furniture, appliances, jewelry, or cars until closing. Using credit cards to buy new living room furniture could jeopardize your loan process by altering your numbers dramatically. Since lending institutions are examining your financial accounts, a large cash purchase is also not advised.
Don't get a new job. Your recent job history should show stability. Getting a new career before you apply for a mortgage may not jeopardize your approval at all. But in some cases, changing careers during the loan application process could bring concern and affect your application.
Don't switch banks or move finances around in your accounts. Bank statements from the last few months for your accounts (checking, savings, money market, and other accounts) will be reviewed as the lending institution makes decisions regarding your approval. To avoid potential fraud, most lenders want a thorough paper trail to document the source of all incoming funds. Switching banks or moving money to another account - no matter the reason - may make it difficult for your lender to verify your funds.
Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until the sale is complete, the earnest money actually belongs to you. Any good faith money is to go toward your expenses upon closing; some FSBO sellers may not understand this. We recommend that you put the funds into a trust account, or get a neutral person, like a lawyer to hold them until closing. The final disposition of good faith funds, in the case of a failed transaction, should be specified in the purchase agreement with your seller.
At Alternative Mortgage Group, we answer questions about this process every day. Give us a call: 561-395-4264.