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 says "yes" and the lender approves the loan. Until the house is really yours, there are still some hurdles to jump. Here are some actions to refrain from during the home buying process to assure the transaction goes well.
Don't overspend on big-ticket items Although you will be listing ways to turn your new house into a showplace, avoid big ticket purchases like appliances, electronics, or furniture. We also recommend that you stay away from vacations and car purchases until the closing of your loan. Financing your stainless steel appliances 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 big items can also be a bad idea: many lenders take into consideration your available cash when approving your loan.
Don't go on a job search. Your recent job history should show consistency. Getting a new career before you apply for a mortgage loan may not jeopardize your approval at all. But for some people, getting a new job during the loan application process may raise concern and hinder your application.
Don't move money around or switch banks. While the lending institution reviews your mortgage loan application, you will likely be instructed to provide bank statements for the last two or three months for your checking accounts, savings accounts, money market accounts and other liquid finances. To avoid potential fraud, most lending institutions need thorough paperwork to verify the source of all funds. No matter the reason, changing banks or transferring funds may raise a red flag with the lender and slow your application process.
Don't give cash directly to your seller (generally in cases of "for sale by owner") to be used as a "good faith" deposit. Your earnest money does not belong to the seller: it is actually yours until the transaction is final. Any good faith funds are to be applied to your expenses upon closing; a individual seller might not understand this. Find an attorney or other neutral party who is able to hold the money or place it in a trust account until you close. The purchase agreement should specify to whom the funds go if the transaction falls through.
At PrimeMax Mortgage Group, NMLS#195523, we answer questions about this process every day. Call us at (256) 543-9211.