What to Avoid During a Home Purchase
Many new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller accepts their offer and the lender approves the loan. There still remain a few major hurdles to jump before your loan closes. Below you'll find a list of actions to avoid during this critical time of your home purchase.
Don't make expensive purchases. Although you will be dreaming of ways to turn your new house into a castle, avoid big ticket purchases like appliances, electronics, or furniture. You will also want to avoid vacations and vehicle purchases until the closing of your loan. Financing new furniture 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 purchase big items can also create a problem: most lending institutions look at your available cash when approving your application.
Don't get a new career. Your recent work history should show stability. Finding a new career (particularly one with a bump in salary) may not hinder your ability to qualify for your loan. But in some cases, getting a new career during the mortgage application process might raise concern and stymie your approval.
Don't take your accounts to a new bank or move around your cash. Bank statements from the last two or three months for accounts in your name (checking, savings, money market, and others) will likely be analyzed as the lender makes decisions regarding your approval. Your lending institution is looking for a steady flow of your funds over the month, in order to avoid fraud. Switching banks or transferring finances elsewhere - for whatever purpose - might hinder the review of your accounts.
Don't give your FSBO (for sale by owner) seller earnest money, delivered to his door. As a rule, your earnest money belongs to you, not the seller up until closing. Some FSBO sellers might not realize that your good faith funds should be applied to your expenses at closing. You'll want to put the deposit into a trust account, or get a neutral party, like a lawyer, to hold it until closing. The final disposition of good faith money, if your transaction fails, should be written in the contract with the seller.
Abundance Home Mortgage can walk you through the pitfalls of getting a mortgage. Give us a call: (512) 335-7800.