What to Avoid During a Home Purchase
Some new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller says "yes" and the lender approves their loan. There still remain a few major hurdles to jump before the keys are handed over. We have given you a list of things below you will want to stay away from when waiting for closing.
Don't throw your money around. You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new dream home, but keep away from expensive purchases like furniture, cars, appliances, or vacations until closing. Using plastic to buy new living room furniture could compromise your loan process by distorting your numbers. Because lending institutions are perusing your financial accounts, a large cash purchase is also not advised.
Don't look for a new career. Lending Institutions like to see a consistent career history on your paperwork. Changing jobs may not jeopardize your ability to qualify for a mortgage loan - particularly if you are going to be making more money. But for some, getting a new job during the loan application process might bring concern and stymie your application.
Don't move finances around or change banks. Bank statements from the last two or three months for accounts in your name (checking, savings, money market, and other assets) will probably be analyzed as the lending institution makes decisions regarding your approval. To eliminate potential fraud, most lending institutions require thorough paperwork to verify the source of all incoming funds. Even for practical reasons, transferring cash or switching banks may make it more difficult for your lender to document your account history.
Don't deliver earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until the completion of the deal, the good faith deposit actually belongs to you. Some FSBO sellers may not know that these good faith funds should be applied to your expenses upon closing. A neutral party, like an attorney can hold onto your funds, or you may put them temporarily into a trust account until closing. The purchase contract should dictate to whom the funds go if the home purchase fails.
Peerless Residential Mortgage can walk you through the pitfalls of getting a mortgage. Call us: (513) 713-1515.