What to Avoid During a Home Purchase
Many 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 their loan. Until your keys are in hand, there still remain some hurdles to jump. We have given you a list of actions below we suggest you stay away from when waiting for your loan to close.
Don't throw your money around. You may be tempted to buy that new sofa for the soon-to-be-yours den, but it's best to avoid making major purchases like furniture, appliances, jewelry, or cars until your home loan closes. Using credit cards to buy furniture could compromise your lending process by changing your numbers dramatically. It's even a red flag to make those large purchases with cash. Lenders are examining your available cash when considering your loan.
Don't go on a career search. Your recent job history should show stability. Changing jobs may not jeopardize your ability to qualify for a mortgage loan - particularly if you are going to be making more money. However, getting a new career during the application process may influence whether or not you are approved.
Don't switch banks or move finances around in your bank accounts. Your lender will require you to submit recent bank statements for your accounts: savings, checking, money market, and other liquid assets. The lending institution is looking for a consistent rise and fall of your money over the month, in the interest of avoiding fraud. No matter the reason, moving banks or moving funds from one account to another may raise a red flag with the lender and slow down your approval process.
Don't give a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your earnest money is yours, not the seller's until the sale is final. The earnest money is to be applied to your expenses closing; the individual seller might not understand this. It's advisable to put the funds into a trust account, or get an attorney to hold them until the deal closes. The purchase contract should indicate where the funds go if the transaction does not go through.
At Alternative Mortgage Group, we answer questions about this process every day. Call us at 561-395-4264.