What to Avoid During your Home Purchase
With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of taking their enthusiasm straight to the mall or furniture store. Until your keys are in hand, there are still some hurdles to jump. Below you'll find a list of things to avoid during this critical time of your home purchase.
Don't buy luxury items. You may be tempted to buy that new sofa for the soon-to-be-yours den, but it's advisable to avoid making large buys like furniture, appliances, jewelry, or cars until your home loan closes. You may send up red flags with your lender if you finance your furniture on your credit cards in the middle of your loan process. Using cash to buy big items can also create an issue: most banks consider your cash on hand when approving your application.
Don't go on a job search. Consistency in your career history is a good thing to lenders. Finding a new career (especially one with a bump in salary) may not jeopardize your ability to qualify for a mortgage loan. But for some people, changing jobs during the loan approval process may raise concern and hinder your approval.
Don't switch banks or move cash around in your bank accounts. Your lender will ask for recent bank statements on all of your accounts: checking, savings, money market, and other liquid assets. To eliminate potential fraud, most lenders want a thorough paper trail to determine the source of all incoming funds. Changing banks or moving finances to another account - for whatever reason - might hinder the documentation of your accounts.
Don't give money directly to your seller (usually in the case of of "for sale by owner") for a "good faith" deposit. Your good faith deposit does not belong to the seller: it remains yours until the sale closes. Although some FSBO sellers might not realize this, the good faith funds should be used for your closing expenses. Get a lawyer or other neutral party who is able to hang on to the money or place it in a trust account until you close. The disposition of earnest money, if your sale fails, should be written in the contract with your seller.
At Contemporary Mortgage Services, Inc, we answer questions about this process every day. Call us: 407-834-3377.
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