What to Avoid During your Home Purchase
Some new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller accepts their offer and the loan is approved. Until the house is really yours, there still remain some hurdles to jump. Below you'll find a list of things to stay away from during this crucial time of your home purchase.
Don't overspend on big-ticket items Although you may be dreaming of ways to turn your new house into a castle, try to stay away from major purchases like appliances, electronics, or furniture. We also recommend that you avoid vacations and car purchases until your loan closes. Financing new furniture with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. Since lenders are examining your financial accounts, a large cash purchase is also a mistake.
Don't look for a new job. Lenders feel comfortable seeing a consistent work history on your application forms. Getting a new career before you apply for a mortgage loan may not jeopardize your approval at all. However, if you switch careers before your loan is approved, your mortgage process could fail or be stalled.
Don't take your accounts to a new bank or move around your finances. As the lender considers your loan application, you will probably be required to submit bank statements for recent months for your saving and checking accounts, money market accounts and other liquid assets. The lending institution looks for a consistent flow of your money each pay period, in the interest of avoiding fraud. Changing banks or moving funds to another account - for whatever purpose - might make it harder for the lender to document your funds.
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 is actually yours until the sale closes. Some sellers may not know that the earnest money should go toward your expenses upon closing. We recommend that you put the funds into a trust account, or get an attorney to hold them until closing. If your transaction fails, your purchase contract should document where the good faith deposit should go.
Tenby J. Dahman can walk you through the pitfalls of getting a mortgage. Call us at 3038627760.