What to Avoid During your 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 furniture store. There still remain a few major hurdles to jump before closing. We have listed some actions below we suggest you stay away from when waiting for your loan to close.
Don't make expensive purchases. Although you will be planning ways to turn your new house into a castle, avoid big ticket purchases like appliances, electronics, or expensive furnishings. We also recommend that you stay away from vacations and vehicle purchases until the closing of your loan. Your credit numbers could change suddenly if you make a huge purchase using plastic. Using cash to buy expensive items can even be a bad idea: many banks look at your available cash when approving your mortgage.
Don't look for a new career. Stability in your work history is a positive thing to lenders. Changing jobs may not jeopardize your ability to qualify for a loan - especially if you are improving your salary. However, switching careers in the middle of your loan process might influence whether or not you are approved.
Don't change banks or move money around in your bank accounts. As your lending institution considers your loan package, you will likely be asked to provide bank statements for the last few months for your saving and checking accounts, money market accounts and other liquid wealth. The lender looks for a steady flow of your money each pay period, in the interest of avoiding fraud. No matter the purpose, changing banks or transferring money may raise a red flag with your lender and impede your loan process.
Don't give your FSBO (for sale by owner) seller earnest money, delivered to his door. As a rule, your earnest money belongs to you, not the seller up until closing. Although some individual sellers might not know this, your earnest money should go toward your closing expenses. We recommend that you put the funds into a trust account, or get an attorney to hold them until closing. If your home purchase fails, the contract with the seller should indicate where the good faith funds should go.