What to Avoid During a Home Purchase
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In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the error of taking their enthusiasm straight to the mall or furniture store. Keep in mind that until you get the keys, your lender is watching your accounts very closely. We have given you a list of things below you will want to avoid when waiting for closing.
Don't buy big-ticket items. You may be itching to turn your new living room into a showplace, or celebrate your new dream home, but stay away from expensive purchases like furniture, cars, appliances, or vacations until the loan closes. Your credit numbers could change suddenly if you make a huge purchase using plastic. Because lending institutions are examining your bank accounts, a large cash purchase is also a bad idea.
Don't look for a new career. Stability in your work history is a positive thing to banks and other lenders. Finding a new job (especially one with a better paycheck) may not jeopardize your ability to qualify for your mortgage loan. However, getting a new career during the loan process could affect your approval.
Don't take your accounts to a new bank or move around your money. While your lending institution reviews your loan package, you will probably be instructed to provide bank statements for the last two or three months for your checking and savings accounts, money market funds and other liquid wealth. The lending institution looks for a steady flow of your money over the month, in the interest of ruling out fraud. No matter the reason, changing banks or transferring funds may raise a red flag with the lender and slow down your qualification process.
Don't give money directly to your seller (usually in the case of of "for sale by owner") for earnest money. As a rule, your earnest money belongs to you, not to the seller until the sale is final. Some FSBO sellers might not realize that the good faith funds must go toward your expenses upon closing. A neutral party, like an attorney can hold onto your earnest funds, or you may put them temporarily into a trust account until you close. The contract should specify where the money goes if the home purchase does not go through.
At The Mortgage Superstore, we answer questions about this process every day. Call us at 575-769-9006.