What to Avoid During a Home Purchase
Some new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller accepts their offer and the lender approves the loan. Until the house is really yours, there still remain some hoops to jump through. We have given you a list of things below we suggest you stay away from when waiting for your loan to close.
Don't buy luxury items. You may be itching to turn your new living room into a home magazine cover, or celebrate your new castle, but stay away from expensive purchases like furniture, jewelry, appliances, or vacations until your loan closes. Using credit cards to buy new living room furniture could compromise your loan process by changing your numbers dramatically. Using cash to buy expensive items can also create a mistake: most banks take into consideration your available cash when approving your mortgage.
Don't look for a new career. Lenders like to see a consistent career history on your paperwork. Getting a new career before you apply for a mortgage may not affect your approval at all. But for some, switching jobs during the mortgage loan application process may raise concern and affect your application.
Don't move finances around or switch banks. Most lenders will instruct the submission of recent bank statements of your accounts: checking, savings, money market, and other assets. To detect fraud, lenders need a clear and consistent picture of how you earn your money and where any additional money comes from. Switching banks or transferring money to another account - no matter the purpose - may hinder the documentation of your funds.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. Until the completion of the deal, the good faith money remains yours. Although some FSBO sellers might not know this, any earnest money should go toward your closing expenses. An attorney or other type of neutral party can hang onto your earnest funds, or you may place them temporarily into a trust account until you close. Your purchase agreement should document where the deposit goes if the home purchase fails.
At Executive Lending Group, we answer questions about this process every day. Call us: 4056158543.