What to Avoid During a Home Purchase
Many new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller says "yes" and the lender approves their loan. Until the keys are handed over, there are still some hoops to jump through. We have listed some actions below you will want to stay away from when waiting for closing.
Don't overspend on big-ticket items Although you will be planning ways to turn your new house into a showplace, try to stay away from big ticket purchases like appliances, electronics, or expensive furnishings. You will also want to stay away from vacations and car purchases until the closing of your loan. Your credit numbers could be altered suddenly if you make a huge purchase using credit cards. Using cash to purchase big items can even create a problem: most banks consider your cash reserve when approving your mortgage loan.
Don't look for a new job. Consistency in your work history is a positive thing to lending institutions. Finding a new job (especially one with a better paycheck) may not change your ability to qualify for your loan. However, switching jobs in the middle of your application process could influence whether or not you are approved.
Don't switch banks or move money around in your accounts. Bank statements from recent months for all of your accounts (checking, savings, money market, and other assets) will probably be analyzed as the lender makes decisions regarding your application. To detect potential fraud, most loans want thorough paperwork to determine the source of all incoming funds. Even for innocent reasons, transferring cash or changing banks may make it difficult for the lending institution to document your account history.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. Your good faith money does not belong to the seller: it remains yours until the sale closes. Although your seller might not realize this, your earnest money must be applied to the buyer's closing expenses. Get a lawyer or other neutral party who is able to hang on to the deposit or place it in a trust account until closing. The final disposition of good faith money, if your transaction fails, should be indicated in the purchase agreement with the seller.
Crown Mortgage can walk you through the pitfalls of getting a mortgage. Call us: (434) 975-5626.
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