What to Avoid During your 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 lender approves the loan. There are still a few major hurdles to jump before the keys are handed over. We have listed some things below we suggest you stay away from when waiting for closing.
Don't make expensive purchases. You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new dream home, but keep away from big purchases like furniture, jewelry, appliances, or vacations until closing. Your credit numbers could change suddenly if you make a huge purchase using plastic. Using cash to purchase expensive items can also be an issue: many banks take into consideration your cash reserve when approving your application.
Don't look for a new career. Consistency in your job history is a positive thing to lenders. Getting a new career before you apply for a mortgage may not get in the way of your approval at all. However, switching jobs in the middle of the loan process could affect whether or not you are approved.
Don't switch banks or move cash around in your accounts. Most lenders will instruct the submission of recent bank statements for all of your accounts: savings, checking, money market, and other assets. To eliminate potential fraud, most loans want detailed paperwork to determine the source of all funds. Even for practical reasons, transferring finances or changing banks might make it harder for the lender to verify 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 up until the deal closes. Some sellers might not realize that any good faith funds must go toward your expenses upon closing. An attorney or other type of neutral party can hang onto your funds, or you may place them temporarily into a trust account until closing. Should your home purchase fail, your contract with the seller should dictate where the good faith funds should go.
At Refresh Funding, we answer questions about this process every day. Give us a call at 305-800-3863.