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 error of carrying their enthusiasm straight to the mall or furniture store. It's best to remember that until closing, your lender is watching your accounts very closely. We have listed some actions below we suggest you avoid when waiting for your loan to close.
Don't empty your wallet on big-ticket items You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new castle, but stay away from expensive purchases like furniture, cars, appliances, or vacations until your loan closes. Your lender may send up red flags if you buy new electronics on your credit cards in the middle of your loan process. It's also a bad idea to make those large purchases with cash. Lenders are looking at your available cash when considering your loan.
Don't go on a career search. Your recent work history should show consistency. Finding a new job (especially one with a better paycheck) may not hinder your ability to qualify for a mortgage loan. However, if you switch careers before you qualify, your mortgage process could fail or be bogged down.
Don't change banks or move cash around in your bank accounts. Bank statements from the last few months for your accounts (checking, savings, money market, and other assets) will probably be studied as the lender considers your application. To eliminate potential fraud, most loans need thorough paperwork to verify the source of all cash. Even for practical purposes, transferring money or changing banks could make it more difficult for your lender to verify your account history.
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 remains yours. Although your FSBO seller may not know this, any good faith funds should be applied to your closing expenses. Get an attorney or other neutral person who will hang on to the funds or place them in a trust account until closing. If your home purchase fails, your contract with the seller should specify to whom your earnest money should go.
Alternative Mortgage Group can walk you through the pitfalls of getting a mortgage. Give us a call: 561-395-4264.