What to Avoid During a Home Purchase
Some new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller accepts their offer and the loan is approved. There are still a few major hurdles to jump before your loan closes. Here are some actions to stay clear of before closing to be sure your transaction goes smoothly.
Don't buy luxury items. You may be itching to turn your new kitchen into a showplace, or celebrate your new castle, but keep away from major purchases like furniture, jewelry, appliances, or vacations until closing. Your lender may send up red flags if you finance new furniture on your credit cards in the middle of your loan process. It's also a red flag to make those large purchases with cash. Lending Institutions are examining your cash reserve when considering your loan.
Don't get a new job. Consistency in your job history is a good thing to lending institutions. Getting a new job may not jeopardize your ability to qualify for a loan - especially if you are improving your salary. However, getting a new career during the approval process might affect your approval.
Don't take your accounts to a new bank or move around your cash. As the lender considers your mortgage application, you will likely be required to produce bank statements for recent months for your saving and checking accounts, money market funds and other liquid wealth. To eliminate potential fraud, most lenders need a thorough paper trail to determine the source of all cash. Changing banks or moving funds to another account - even if its only to pool funds - might make it difficult for the lender to verify your funds.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. Your good faith money does not belong to the seller: it remains yours until closing. Any good faith funds are to be applied to your expenses upon closing; some sellers may not understand this. You'll need to put the money into a trust account, or get an attorney to hold it until the closing of the sale. Should your home purchase fail, the contract with the seller should indicate to whom your good faith deposit should go.
Abbey Mortgage can answer questions about these "Don'ts" and many others. Call us at 352-369-4200.