What to Avoid During your Home Purchase
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, many homebuyers make the mistake of taking their enthusiasm straight to the mall or appliance store. Until the keys are handed over, there still remain some hoops to jump through. Here are some actions to refrain from during the home buying process to be sure your transaction goes well.
Don't throw your money around. Although you may be planning 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 vehicle purchases until the closing of your loan. Your lender may send up red flags if you purchase your electronics on your credit cards in the middle of your loan process. Using cash to purchase expensive items can also be an issue: most lending institutions take into consideration your available cash when approving your application.
Don't look for a new career. Your recent work history should show consistency. Getting a new career before you apply for a loan may not affect your approval at all. But for some, getting a new career during the mortgage approval process could raise concern and hinder your application.
Don't switch your accounts to a new bank or move around your finances. Bank statements from the last few months for all of your accounts (savings, checking, money market, and others) will likely be studied as the lending institution makes decisions regarding your mortgage application. To eliminate potential fraud, most loans want a thorough paper trail to determine the source of all cash. No matter the purpose, changing banks or moving money from one account to another could raise a red flag with your lender and impede your application process.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, delivered to his door. Until closing, any earnest money remains yours. Some FSBO sellers might not realize that your earnest money should be used for your expenses upon closing. Find a lawyer or other neutral party who is able to hang on to the deposit or put it in a trust account until closing. The contract should dictate who keeps the money if the transaction fails.