What to Avoid During a Home Purchase
With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of carrying their enthusiasm straight to the mall or appliance store. Until your loan closes, there are still some hurdles to jump. Below you'll find a list of actions to avoid during this critical time of your home purchase.
Don't empty your wallet on big-ticket items Although you may be listing ways to turn your new house into a showplace, try to stay away from major purchases like appliances, electronics, or expensive furnishings. You will also want to avoid vacations and car purchases until the closing of your loan. Financing your Plasma TVs with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. It's even a bad idea to make those big-ticket purchases using cash. Lending Institutions are examining your cash reserve when considering your loan.
Don't look for a new career. Stability in your career history is a positive thing to lending institutions. Finding a new career (especially one with a better salary) may not change your ability to qualify for a loan. But in some cases, changing careers during the mortgage application process may bring concern and hinder your application.
Don't switch banks or move money around in your bank accounts. While your lending institution reviews your mortgage application, you will likely be instructed to provide bank statements for the last two or three months on your checking accounts, savings accounts, money market funds and other liquid wealth. The lender looks for a consistent rise and fall of your money over the pay period, in order to rule out fraud. No matter the purpose, moving banks or transferring funds might raise a red flag with your lender and slow down your loan process.
Don't give cash directly to your seller (usually in the case of of "for sale by owner") to be used as earnest money. As a rule, your good faith deposit belongs to you, not to the seller until the sale is final. Your good faith funds are to be applied to your expenses upon closing; a individual seller might not realize this. We recommend that you put the funds into a trust account, or get an attorney to hold them until the closing of the sale. The contract should document to whom the funds go if the home purchase does not go through.