What to Avoid During your Home Purchase
Many new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller says "yes" and the loan is approved. Until the house is really yours, there still remain some hurdles to jump. We have given you a list of things below we suggest you avoid when waiting for your loan to close.
Don't throw your money around. Although you will be listing ways to turn your new home into a showplace, avoid big ticket purchases like appliances, electronics, or furniture. You will also want to stay away from vacations and vehicle purchases until your loan closes. Financing new bedroom furniture with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. It's even a red flag to make those huge purchases with cash. Lenders are looking at your cash reserve when considering your loan.
Don't get a new job. Lending Institutions look for a consistent career history on your application forms. Finding a new job (especially one with a bigger paycheck) may not jeopardize your ability to qualify for your mortgage loan. However, finding a new job during the loan process might influence whether or not you are approved.
Don't take your accounts to a new bank or move around your cash. While the lender considers your mortgage loan application, you will likely be asked to produce bank statements for recent months for your saving and checking accounts, money market funds and other liquid finances. To avoid potential fraud, most lending institutions need detailed paperwork to document the source of all funds. No matter the purpose, switching banks or transferring funds could raise a red flag with your lender and impede your approval process.
Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith deposit is yours, not the seller's until the sale is final. The FSBO seller may not know that this good faith money must be used for your expenses at closing. A neutral party, like an attorney can hang onto your earnest money, or you may put it temporarily into a trust account until closing. The disposition of earnest money, if your home purchase fails, should be written in the contract with the seller.
Carter Financial Solutions can answer questions about these "Don'ts" and many others. Give us a call at 866-840-8745 x2.