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 appliance store. It's wise to remember that until closing, your lender is watching your finances very closely. Below you'll find a list of actions to avoid during this crucial time of your home purchase.
Don't throw your money around. Although you may be dreaming of ways to turn your new house into a showplace, try to stay away from major purchases like appliances, electronics, or expensive furnishings. We also recommend that you keep away from vacations and vehicle purchases until the closing of your loan. Financing your furniture with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. It's also a red flag to make those big purchases using cash. Lenders are looking at your cash on hand when considering your loan.
Don't look for a new career. Lending Institutions feel comfortable seeing a consistent career history on your application. Finding a new job (particularly one with a bump in salary) may not jeopardize your ability to qualify for a loan. However, if you switch careers before your loan is approved, your process could fail or be stalled.
Don't take your accounts to a new bank or move around your cash. Bank statements from the last few months for accounts in your name (checking, savings, money market, and other assets) will probably be analyzed as the lender considers your application. To avoid potential fraud, most loans need detailed paperwork to determine the source of all funds. Changing banks or moving funds to another account - no matter the purpose - may make it harder for your 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. As a rule, your good faith money is yours, not the seller's until the sale is final. The earnest funds are to be applied to your expenses upon closing; some sellers might not understand this. Get an attorney or other neutral party who can hang on to the funds or place them in a trust account until you close. The final disposition of earnest funds, in the case of a failed transaction, should be included in the purchase agreement with your seller.
Tenby J. Dahman can answer questions about these "Don'ts" and many others. Call us at 3038627760.