Things to Avoid While Buying a Home
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of carrying their enthusiasm straight to the mall or appliance store. It's best to remember that until you get the keys, your lender is watching your accounts very closely. Here are some things to refrain from before closing to assure your transaction goes well.
Don't empty your wallet on big-ticket items It may be tempting to order that new Turkish rug for the soon-to-be-yours den, but it's best to avoid making big ticket purchases like furniture, appliances, jewelry, or cars until your home loan closes. Financing new stainless steel appliances with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. It's also a mistake to make those big-ticket purchases with cash. Lenders are looking at your cash on hand when considering your loan.
Don't go on a job search. Lending Institutions feel comfortable seeing a consistent work history on your application. Getting a new job may not affect your ability to qualify for a loan - especially if you are getting a better salary. However, if you switch careers before your loan is approved, your mortgage process could fail or be slowed down.
Don't move finances around or switch banks. While your lender reviews your mortgage loan application, you will probably be instructed to submit bank statements for recent months on your saving and checking accounts, money market funds and other liquid assets. To avoid potential fraud, most lending institutions need a detailed paper trail to verify the source of all incoming funds. Even for practical reasons, transferring money or switching banks may make it difficult for the lending institution to document your account history.
Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until the sale is complete, the good faith deposit actually belongs to you. A FSBO seller might not know that the good faith money must be used for your expenses at closing. Get a lawyer or other neutral person who can hold the funds or place them in a trust account until you close. Your contract should indicate who keeps the money if the transaction falls through.
Peerless Residential Mortgage can answer questions about these "Don'ts" and many others. Call us at (513) 713-1515.