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 carrying their enthusiasm straight to the mall or appliance store. Until the keys are handed over, there still remain some hoops to jump through. We have listed some actions below we suggest you avoid when waiting for your loan to close.
Don't buy big-ticket items. You may be itching to turn your new living room into a showplace, or celebrate your new dream home, but stay away from big purchases like furniture, cars, appliances, or vacations until the loan closes. You may send up red flags with your lender if you purchase new electronics on your credit cards in the middle of your loan process. Because lenders are looking closely at your financial accounts, a large cash purchase is also not advised.
Don't look for a new job. Stability in your career history is a good thing to banks and other lenders. Changing jobs may not jeopardize your ability to qualify for a loan - particularly if you are improving your salary. However, if you switch careers before approval, your mortgage process could fail or be stalled.
Don't move finances around or change banks. Your lender will instruct the submission of recent bank statements on your accounts: savings, checking, money market, and other assets. In order to avoid fraud, lenders will need a consistent portrayal of how you earn your money and where additional wealth comes from. No matter the reason, switching banks or transferring money might raise a red flag with your lender and slow your approval process.
Don't hand over a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Your good faith deposit does not belong to the seller: it remains yours until closing. Although some individual sellers might not understand this, the earnest money should go toward your closing expenses. An attorney or other type of neutral party can hang onto your earnest money, or you may put it temporarily into a trust account until closing. If your home purchase fails, your purchase contract should indicate where this good faith deposit should go.
At America's Money Source, we answer questions about this process every day. Call us at (407) 898-7559.
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