Things to Avoid While Purchasing a Home
In the rush of excitement 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 the keys are handed over, there are still 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. It may be tempting to order that new couch for the soon-to-be-yours living room, but it's best to avoid making big ticket buys like furniture, appliances, electronic equipment, or vacations until closing. Financing new stainless steel appliances with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. Since lenders are examining your bank accounts, a large cash purchase is also not advised.
Don't go on a job search. Consistency in your career history is a positive thing to lenders. Getting a new career before you start the application process for a mortgage may not jeopardize your approval at all. However, if you switch careers before approval, your mortgage process could fail or be stalled.
Don't switch your accounts to a new bank or move around your finances. Bank statements from the last two or three months for accounts in your name (checking, savings, money market, and others) will be studied as the lending institution makes decisions regarding your application. Your lender looks for a consistent rise and fall of your money each month, in the interest of avoiding fraud. Switching banks or moving money elsewhere - no matter the reason - might make it difficult for your lender to verify your funds.
Don't give funds directly to your seller (commonly in cases of "for sale by owner") to be used as a "good faith" deposit. As a rule, your good faith deposit belongs to you, not the seller until the deal closes. Some sellers may not know that these good faith funds is to be applied to your expenses at closing. An attorney or other type of neutral party can hang onto your earnest money, or you may put it temporarily into a trust account until closing. The disposition of earnest funds, if your home purchase falls through, should be documented in the purchase agreement with your seller.
At Primemax Mortgage Group, NMLS#195523, we answer questions about this process every day. Call us at 2565439211.