Things to Avoid While Purchasing a Home
With the thrill that comes with an accepted offer and a "yes" from the lender, some homebuyers make the error of carrying their enthusiasm straight to the mall or appliance store. There still remain a few major hurdles to jump before your loan closes. Here are some things to avoid during the home buying process to be sure the transaction goes smoothly.
Don't buy luxury items. Although you will be listing ways to turn your new home into a castle, try to stay away from big ticket purchases like appliances, electronics, or expensive furnishings. You will also want to keep away from vacations and vehicle 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 expensive items can even be a mistake: most lending institutions take into consideration your cash on hand when approving your mortgage.
Don't get a new job. Your recent career history should show stability. Getting a new career before you start the application process for a mortgage may not affect your approval at all. However, switching careers in the middle of your application process may affect whether or not you are approved.
Don't take your accounts to a new bank or move around your finances. Your lender will instruct the submission of recent bank statements for your accounts: checking, savings, money market, and other assets. To eliminate potential fraud, most lending institutions require thorough paperwork to verify the source of all incoming funds. Changing banks or transferring funds to another account - even if its merely to consolidate funds - may make it difficult for the lender to document your funds.
Don't give your FSBO (for sale by owner) seller earnest money, delivered to his door. Your good faith money does not belong to the seller: it is actually yours until closing. Some FSBO sellers might not realize that your good faith funds must go toward your expenses upon closing. An attorney or other type of neutral party can hold your earnest funds, or you may put them temporarily into a trust account until closing. Your purchase agreement should document who keeps the money if the transaction fails.