What to Avoid During a Home Purchase
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of taking their enthusiasm straight to the mall or appliance store. There still remain a few major hurdles to jump before closing. Here are some actions to avoid before closing to be sure your transaction goes well.
Don't throw your money around. It may be tempting to order that new sofa for the soon-to-be-yours living room, but it's best to stay away from making major purchases like furniture, appliances, electronic equipment, or vacations until your home loan closes. Your lender may send up red flags if you buy new furniture on your credit cards during your loan process. Since lending institutions are looking closely at your bank accounts, a large cash purchase is also not advised.
Don't get a new career. Lending Institutions feel comfortable seeing a consistent work history on your paperwork. Changing jobs may not affect your ability to qualify for a mortgage loan - especially if you are getting a better salary. However, switching careers during your loan process may influence whether or not you are approved.
Don't move cash around or change banks. Bank statements from recent months for your accounts (savings, checking, money market, and others) will be reviewed as the lender makes decisions regarding your loan application. To avoid potential fraud, most lenders require a detailed paper trail to document the source of all incoming funds. Even for innocent reasons, transferring cash or switching banks might make it more difficult for your lending institution to document your account history.
Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until the completion of the deal, any good faith deposit remains yours. Your seller might not realize that any good faith money must be applied to your expenses upon closing. Get an attorney or other neutral party who is able to hold the money or put it in a trust account until closing. The final disposition of good faith funds, in the case of a failed transaction, should be indicated in the purchase agreement with the seller.
Crown Mortgage can walk you through the pitfalls of getting a mortgage. Give us a call at (434) 975-5626.
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