What to Avoid During a Home Purchase
With the thrill 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. There are still a few major hurdles to jump before your loan closes. We have given you a list of things below you will want to avoid when waiting for closing.
Don't throw your money around. You may be tempted to order that new sofa for the soon-to-be-yours living room, but it's advisable to avoid making major purchases like furniture, appliances, electronic equipment, or cars until your home loan closes. Financing new Plasma TVs with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. Using cash to buy expensive items can even be a mistake: many lenders take into consideration your cash reserve when approving your mortgage loan.
Don't go on a career search. Stability in your career history is a good thing to lending institutions. Finding a new job (especially one with a bump in salary) may not change your ability to qualify for your mortgage. However, switching careers in the middle of the loan process may influence whether or not you are approved.
Don't take your accounts to a new bank or move around your finances. While the lending institution reviews your mortgage application, you will likely be instructed to submit bank statements for recent months on your checking and savings accounts, money market accounts and other liquid finances. To avoid fraud, lenders look for clear documentation of how you earn your living and where any additional wealth comes from. Even for innocent purposes, transferring funds or switching banks could make it difficult for your lender to document your bank history.
Don't hand over a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Until the sale is complete, any good faith money remains yours. The earnest money is to be used for your expenses upon closing; the FSBO seller may not realize this. You'll want to put the funds into a trust account, or get a neutral person, like an attorney to hold them until closing. Your contract should indicate where the funds go if the transaction fails.
At Affirm Home Loans, we answer questions about this process every day. Give us a call: (972) 292-0448.