What to Avoid During your Home Purchase
Many new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller accepts their offer and the loan is approved. There still remain a few major hurdles to jump before the house is realy yours. We have listed some things below we suggest you avoid when waiting for closing.
Don't buy luxury items. Although you may be listing ways to turn your new house into a showplace, avoid major purchases like appliances, electronics, or expensive furnishings. We also recommend that you avoid vacations and car purchases until your loan closes. You may send up red flags with your lender if you purchase your furniture on your credit cards during your loan process. Using cash to buy big-ticket items can also be a bad idea: most lenders consider your available cash when approving your mortgage.
Don't get a new job. Lenders like to see a consistent work history on your application. Finding a new career (particularly one with a bigger salary) may not affect your ability to qualify for a loan. However, switching jobs in the middle of your loan process may influence your approval.
Don't change banks or move money around in your accounts. While the lending institution reviews your mortgage loan package, you will probably be required to provide bank statements for the last two or three months on your checking and savings accounts, money market accounts and other liquid finances. To detect fraud, lenders will need a consistent portrayal of how you earn your living and where additional funds come from. Even for practical purposes, moving around funds or switching banks might make it more difficult for the lender to confirm your account history.
Don't hand over a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Until the completion of the deal, any good faith money actually belongs to you. Although your FSBO seller may not realize this, the good faith funds should be applied to the buyer's closing expenses. An attorney or other type of neutral party can hold your earnest funds, or you may place them temporarily into a trust account until you close. Should your sale fall through, the purchase contract should document where this good faith deposit should go.
At Wires of Energy, we answer questions about this process every day. Give us a call: 4058873713.