What to Avoid During a Home Purchase
With the thrill that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of carrying their enthusiasm straight to the mall or furniture store. It's wise to remember that until closing, your lender is watching your finances very closely. Here are some actions to refrain from during the home buying process to assure your transaction goes smoothly.
Don't buy luxury items. You may be itching to turn your new kitchen into a showplace, or celebrate your new castle, but stay away from big purchases like furniture, cars, appliances, or vacations until your loan closes. Using credit cards to buy new living room furniture could jeopardize your lending process by distorting your numbers. Since lenders are looking closely at your financial accounts, a large cash purchase is also a mistake.
Don't get a new career. Lending Institutions like to see a consistent career history on your application. Finding a new career (especially one with a bigger paycheck) may not jeopardize your ability to qualify for a loan. However, switching jobs in the middle of your approval process could affect whether or not you are approved.
Don't switch your accounts to a new bank or move around your finances. While your lender considers your mortgage package, you will probably be required to submit bank statements for the last few months on your saving and checking accounts, money market accounts and other liquid wealth. The lending institution needs to see a consistent rise and fall of your money each pay period, in order to avoid fraud. Even for innocent reasons, moving around cash or changing banks may make it difficult for the lender to verify your account history.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. As a rule, your good faith deposit is yours, not the seller's up until closing. Your seller may not know that these good faith funds should be used for your expenses upon closing. It's best 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 disposition of earnest money, in the case of a failed transaction, should be included in the purchase agreement with the seller.
Halpern & Associates Mortgage Corporation can answer questions about these "Don'ts" and many others. Call us: (305) 535-2230.