Don't Trip Yourself up While Buying your New Home
With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the mistake of carrying their enthusiasm straight to the mall or furniture store. There are still a few major hurdles to jump before the house is realy yours. Below you'll find a list of actions to stay away from during this critical time of your home purchase.
Don't empty your wallet on big-ticket items You may be itching to order that new easy-chair for the soon-to-be-yours living room, but it's best to stay away from making large purchases like furniture, appliances, electronic equipment, or vacations until your home loan closes. You may send up red flags with your lender if you buy your electronics on your credit cards in the middle of your loan process. Using cash to purchase big items can even be a problem: many lenders consider your cash reserve when approving your mortgage.
Don't go on a job search. Your recent work history should show stability. Changing jobs may not compromise your ability to qualify for a mortgage loan - especially if you are getting a better salary. However, if you switch careers before approval, your mortgage process could fail or be bogged down.
Don't move cash around or change banks. Bank statements from the last few months for your accounts (checking, savings, money market, and others) will probably be reviewed as the lending institution makes decisions regarding your mortgage application. To detect potential fraud, most loans require a thorough paper trail to verify the source of all incoming funds. No matter the reason, switching banks or transferring funds could raise a red flag with the lender and slow your approval process.
Don't deliver a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith money is yours, not the seller's until closing. Although some FSBO sellers might not know this, the earnest money should be used for the buyer's closing expenses. We recommend that you put the money into a trust account, or get an attorney to hold it until closing. The purchase contract should document who gets 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.