What to Avoid During a Home Purchase
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of taking their enthusiasm straight to the mall or furniture store. It's wise to remember that until closing, your lender is watching you very closely. Here are some things to avoid during the home buying process to assure the transaction goes well.
Don't buy luxury items. You may be itching to turn your new living room into a showplace, or celebrate your new castle, but stay away from expensive purchases like furniture, cars, appliances, or vacations until your loan closes. Your credit numbers could be altered suddenly if you purchase new furniture using plastic. Using cash to purchase big items can also create an issue: many lending institutions look at your cash on hand when approving your mortgage loan.
Don't look for a new job. Stability in your work history is a good thing to lenders. Finding a new job (particularly one with a bigger salary) may not hinder your ability to qualify for a mortgage. However, if you switch careers before approval, your mortgage process could fail or be stalled.
Don't move finances around or switch banks. While your lending institution reviews your loan application, you will probably be instructed to provide bank statements for the last two or three months on your checking accounts, savings accounts, money market accounts and other liquid assets. To avoid potential fraud, most lending institutions want detailed paperwork to determine the source of all incoming funds. Changing banks or moving money to another account - for whatever reason - might hinder the review of your funds.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. Your good faith money does not belong to the seller: it remains yours until closing. Your good faith money is to go toward your expenses upon closing; the FSBO seller might not understand this. Find a lawyer or other neutral party who is able to hang on to the funds or place them in a trust account until you close. The disposition of earnest money, in the case of a failed transaction, should be written in the contract with your seller.
Great Mortgage NMLS#478647 can answer questions about these "Don'ts" and many others. Give us a call at 708.966.9005.