What to Avoid During your Home Purchase
With the thrill that comes with an accepted offer and a "yes" from the lender, some homebuyers make the error of taking their enthusiasm straight to the mall or appliance store. Until your keys are in hand, there still remain some hurdles to jump. Below you'll find a list of things to avoid during this critical time of your home purchase.
Don't empty your wallet on big-ticket items You may be tempted to buy that new couch for the soon-to-be-yours living room, but it's advisable to avoid making major buys like furniture, appliances, electronic equipment, or vacations until closing. Your credit numbers could change suddenly if you purchase new furniture using plastic. It's also a mistake to make those large purchases using cash. Lending Institutions are looking at your cash reserve when considering your loan.
Don't go on a job search. Consistency in your work history is a positive thing to banks and other lenders. Finding a new career (particularly one with a better salary) may not change your ability to qualify for a loan. But for some, getting a new career during the mortgage loan application process might raise concern and affect your application.
Don't change banks or move cash around in your bank accounts. Bank statements from recent months for accounts in your name (checking, savings, money market, and other assets) will be studied as the lending institution makes decisions regarding your application. The lending institution wants to see a consistent rise and fall of your money over the pay period, in order to rule out fraud. Switching banks or transferring money to another account - even if its only to pool funds - may hinder the documentation of your accounts.
Don't give money directly to your seller (generally in cases of "for sale by owner") to be used as a "good faith" deposit. Your good faith deposit does not belong to the seller: it is actually yours until the sale closes. Some FSBO sellers might not realize that the good faith funds must be applied to your expenses upon closing. Find a lawyer or other neutral party who can hold the deposit or put it in a trust account until you close. The purchase agreement should indicate to whom the deposit goes if the home purchase falls through.
At Affirm Home Loans, we answer questions about this process every day. Call us at (972) 292-0448.