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 says "yes" and the lender approves their loan. There are still a few major hurdles to jump before the house is realy yours. Below you'll find a list of things to avoid during this critical time of your home purchase.
Don't buy big-ticket items. Although you may be planning ways to turn your new home into a showplace, try to stay away from major purchases like appliances, electronics, or expensive furnishings. We also recommend that you avoid vacations and car purchases until your loan closes. Your credit numbers could change suddenly if you make a huge purchase using credit cards. Using cash to buy big items can also be a problem: many banks take into consideration your available cash when approving your mortgage loan.
Don't look for a new job. Lenders feel comfortable seeing a consistent job history on your application forms. Getting a new job may not affect your ability to qualify for a loan - especially if you are getting a better salary. However, switching careers in the middle of the application process may affect your approval.
Don't switch your accounts to a new bank or move around your finances. Your lender will require you to submit recent bank statements of all of your accounts: checking, savings, money market, and other assets. The lending institution hopes to see a steady rise and fall of your funds over the pay period, in the interest of avoiding fraud. No matter the purpose, switching banks or moving money from one account to another might raise a red flag with the lender and impede your loan process.
Don't give money directly to your seller (usually in cases 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 your FSBO seller might not understand this, the good faith money should be used for your closing expenses. You'll want to put the funds into a trust account, or get an attorney to hold them until closing. Your contract should dictate where the funds go if the transaction fails.
At Refresh Funding, we answer questions about this process every day. Call us: 305-800-3863.