What to Avoid During your Home Purchase
In the rush of excitement 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. There are still a few major hurdles to jump before closing. Below you'll find a list of things to stay away from during this critical time of your home purchase.
Don't empty your wallet on big-ticket items You may be itching to turn your new living room into a showplace, or celebrate your new castle, but stay away from expensive purchases like furniture, jewelry, appliances, or vacations until the loan closes. Using plastic to buy furniture could jeopardize your lending process by distorting your numbers. Using cash to purchase expensive items can even be a bad idea: most lenders consider your cash on hand when approving your mortgage loan.
Don't get a new career. Stability in your career history is a good thing to banks and other lenders. Finding a new career (especially one with a better paycheck) may not jeopardize your ability to qualify for a mortgage. However, if you switch careers before approval, your process could fail or be stalled.
Don't move cash around or change banks. While the lending institution considers your mortgage loan application, you will probably be asked to produce bank statements for recent months for your checking accounts, savings accounts, money market accounts and other liquid wealth. To avoid fraud, lenders look for a consistent portrayal of how you earn your money and where additional funds come from. Even for innocent reasons, transferring finances or switching banks could make it more difficult for the lending institution to confirm your bank history.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. Your good faith deposit does not belong to the seller: it remains yours until the sale closes. The FSBO seller may not realize that these good faith funds is to go toward your expenses upon closing. An attorney or other type of neutral party can hold onto your funds, or you may put them temporarily into a trust account until you close. Should your home purchase fail, your purchase contract should indicate to whom your earnest money should go.
Refresh Funding can walk you through the pitfalls of getting a mortgage. Give us a call at 305-800-3863.