What to Avoid During a Home Purchase
Many new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller says "yes" and the loan is approved. Keep in mind that until you get the keys, your lender is watching your finances very closely. Below you'll find a list of actions to avoid during this crucial time of your home purchase.
Don't buy luxury items. You may be itching to turn your new kitchen into a showplace, or celebrate your new dream home, but keep away from major purchases like furniture, jewelry, appliances, or vacations until the loan closes. Financing your furniture with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. Since lending institutions are perusing your financial accounts, a large cash purchase is also not advised.
Don't get a new job. Lending Institutions feel comfortable seeing a consistent job history on your application forms. Getting a new job may not compromise your ability to qualify for a loan - especially if you are going to be making more money. But in some cases, changing careers during the mortgage application process may bring concern and affect your approval.
Don't switch your accounts to a new bank or move around your cash. Bank statements from the last two or three months for your accounts (savings, checking, money market, and others) will likely be reviewed as the lender considers your mortgage application. To avoid potential fraud, most lenders require thorough paperwork to determine the source of all cash. Switching banks or moving money elsewhere - even if its only to pool funds - may make it harder for the lender to verify your funds.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, made out directly to him. As a rule, your good faith deposit belongs to you, not to the seller until closing. Some sellers might not realize that your good faith funds should be used for your expenses upon closing. You'll need to put the funds into a trust account, or get a neutral person, like an attorney to hold them until the closing of the sale. The final disposition of good faith money, if your sale fails, should be indicated in the purchase agreement with your seller.
Yamini Patel can walk you through the pitfalls of getting a mortgage. Give us a call at (832) 730-2000.