Things to Avoid While Purchasing a Home
With the thrill that comes with an accepted offer and a "yes" from the lender, some homebuyers make the error of carrying their enthusiasm straight to the mall or furniture store. Until your loan closes, there are still some hurdles to jump. We have listed some actions below we suggest you avoid when waiting for your loan to close.
Don't empty your wallet on big-ticket items It may be tempting to order that new sofa for the soon-to-be-yours den, but it's best to stay away from making large purchases like furniture, appliances, electronic equipment, or cars until closing. Using credit cards to buy furniture could jeopardize your lending process by distorting your numbers. Using cash to buy expensive items can also be a problem: many lending institutions look at your cash reserve when approving your loan.
Don't look for a new job. Your recent job history should show consistency. Getting a new career before you apply for a loan may not affect your approval at all. However, if you switch careers before approval, your loan process could fail or be stalled.
Don't take your accounts to a new bank or move around your cash. As the lender considers your mortgage application, you will probably be asked to produce bank statements for the last few months for your checking and savings accounts, money market accounts and other liquid finances. To avoid potential fraud, most lending institutions need a thorough paper trail to determine the source of all funds. Changing banks or moving funds to another account - for whatever purpose - may hinder the documentation of your funds.
Don't give cash directly to your seller (usually 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 closing. Your seller may not realize that any earnest money must be applied to your expenses at closing. An attorney or other type of neutral party can hold your earnest funds, or you may put them temporarily into a trust account until you close. The final disposition of earnest money, if your transaction fails, should be specified in the purchase agreement with the seller.
At Primemax Mortgage Group, NMLS#195523, we answer questions about this process every day. Give us a call: 256-543-9211.