What to Avoid During a Home Purchase
Some new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller says "yes" and the lender approves their loan. It's best to remember that until you get the keys, your lender is watching your finances very closely. We have listed some actions below we suggest you avoid when waiting for your loan to close.
Don't overspend on big-ticket items Although you may be listing ways to turn your new home into a castle, try to stay away from major purchases like appliances, electronics, or furniture. We also recommend that you keep away from vacations and car purchases until your loan closes. Using plastic to buy furniture could jeopardize your lending process by altering your numbers dramatically. It's even a mistake to make those big purchases using cash. Lending Institutions are looking at your cash on hand when considering your loan.
Don't get a new job. Your recent job history should show consistency. Finding a new job (especially one with a better paycheck) may not jeopardize your ability to qualify for your mortgage. But for some, changing careers during the mortgage application process might raise concern and stymie your application.
Don't move finances around or change banks. Most lenders will instruct the submission of recent bank statements for all of your accounts: savings, checking, money market, and other assets. In order to detect fraud, lenders need a clear and consistent picture of how you earn your money and where any additional money comes from. Even for innocent purposes, transferring money or switching banks may make it difficult for your lending institution to verify your bank history.
Don't give cash directly to your seller (generally in the case of of "for sale by owner") for a "good faith" deposit. As a rule, your good faith deposit belongs to you, not the seller until closing. Although your FSBO seller might not understand this, the earnest money must be applied to your closing expenses. Find an attorney or other neutral person who can hold the funds or put them in a trust account until closing. If your sale falls through, the purchase contract should dictate where your earnest money should go.
At America's Money Source, we answer questions about this process every day. Call us: (407) 898-7559.
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