What to Avoid During a Home Purchase
Many new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller accepts their offer and the lender approves their loan. Until your keys are in hand, there still remain some hoops to jump through. Below you'll find a list of actions to stay away from during this crucial time of your home purchase.
Don't buy luxury items. You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new castle, but stay away from expensive purchases like furniture, jewelry, appliances, or vacations until your loan closes. Using credit cards to buy new living room furniture could compromise your loan process by changing your numbers dramatically. Using cash to buy big items can even create an issue: many banks consider your cash on hand when approving your loan.
Don't look for a new career. Your recent work history should show consistency. Changing jobs may not affect your ability to qualify for a mortgage loan - particularly if you are going to be making more money. But for some people, changing careers during the loan application process may bring concern and affect your approval.
Don't take your accounts to a new bank or move around your money. While your lender reviews your loan application, you will likely be asked to submit bank statements for recent months on your checking and savings accounts, money market funds and other liquid assets. Your lending institution needs to see a steady flow of your money over the pay period, in order to avoid fraud. Switching banks or transferring funds elsewhere - even if its only to consolidate funds - may hinder the documentation of your accounts.
Don't deliver 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. Any earnest money is to be applied to your expenses upon closing; some FSBO sellers may not understand this. Get a lawyer or other neutral person who can hang on to the funds or place them in a trust account until closing. If your sale falls through, your purchase agreement should indicate to whom this earnest money should go.
Abundance Home Mortgage can answer questions about these "Don'ts" and many others. Give us a call: (512) 335-7800.