What to Avoid During your Home Purchase
In the rush of excitement 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 furniture store. Until closing, there still remain some hoops to jump through. Here are some actions to avoid before closing to be sure your transaction goes well.
Don't overspend on big-ticket items You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new dream home, but keep away from major purchases like furniture, cars, appliances, or vacations until your loan closes. Using plastic to buy furniture could jeopardize your loan process by distorting your numbers. Because lending institutions are examining your bank accounts, a large cash purchase is also a bad idea.
Don't go on a career search. Stability in your job history is a good thing to lenders. Finding a new career (especially one with a bump in salary) may not hinder your ability to qualify for a mortgage. However, if you switch careers before your loan is approved, your mortgage process could fail or be stalled.
Don't switch banks or move finances around in your bank accounts. While the lender reviews your loan application, you will likely be instructed to submit bank statements for recent months for your checking accounts, savings accounts, money market funds and other liquid wealth. Your lending institution looks for a steady rise and fall of your funds each month, in the interest of ruling out fraud. Even for innocent purposes, moving around funds or changing banks might make it difficult for your lending institution to confirm your account history.
Don't give money directly to your seller (generally in the case of of "for sale by owner") for earnest money. Until the sale is complete, the good faith deposit remains yours. Your earnest money is to be applied to your expenses closing; some individual sellers may not understand this. An attorney or other type of neutral party can hold onto your earnest funds, or you may put them temporarily into a trust account until closing. If your transaction fails, the contract with the seller should indicate where this earnest money should go.
At Alternative Mortgage Group, we answer questions about this process every day. Give us a call at 561-395-4264.