Things to Avoid While Purchasing a Home
Many new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller accepts their offer and the loan is approved. It's best to remember that until closing, your lender is watching your finances very closely. Here are some actions to stay clear of during the home buying process to be sure your transaction goes smoothly.
Don't throw your money around. You may be itching to turn your new living room into a home magazine cover, or celebrate your new castle, but stay away from major purchases like furniture, jewelry, appliances, or vacations until the loan closes. Financing your 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. It's also a red flag to make those large purchases using cash. Lenders are examining your cash on hand when considering your loan.
Don't look for a new career. Consistency in your job history is a good thing to lenders. Getting a new job may not jeopardize your ability to qualify for a loan - especially if you are getting a better salary. But for some people, changing jobs during the loan application process could bring concern and affect your application.
Don't switch banks or move cash around in your bank accounts. Your lender will require you to produce recent bank statements on your accounts: checking, savings, money market, and other liquid assets. To avoid potential fraud, most lending institutions want a detailed paper trail to verify the source of all funds. Even for innocent reasons, moving around funds or switching banks may make it harder for your lender to confirm your account history.
Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith deposit is yours, not the seller's until the deal closes. Although some FSBO sellers might not know this, your good faith money should go toward your closing expenses. You'll want to put the deposit into a trust account, or get a neutral party, like an attorney, to hold it until the deal closes. The final disposition of earnest money, if your sale falls through, should be documented in the purchase agreement with the seller.
Abbey Mortgage can answer questions about these "Don'ts" and many others. Call us at 352-369-4200.