What to Avoid During a Home Purchase
Many new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller accepts their offer and the lender approves the loan. There are still a few major hurdles to jump before the keys are handed over. We have listed some actions below you will want to stay away from when waiting for your loan to close.
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 big purchases like furniture, jewelry, appliances, or vacations until closing. You may send up red flags with your lender if you purchase new appliances on your credit cards in the middle of your loan process. It's also a red flag to make those big purchases with cash. Lenders are looking at your cash reserve when considering your loan.
Don't get a new job. Your recent career history should show consistency. Getting a new job may not jeopardize your ability to qualify for a mortgage loan - particularly if you are getting a bigger paycheck. However, switching careers in the middle of the application process might affect whether or not you are approved.
Don't move cash around or change banks. While your lending institution considers your loan application, you will probably be asked to produce bank statements for the last two or three months for your checking accounts, savings accounts, money market funds and other liquid finances. In order to eliminate fraud, lenders need a consistent portrayal of how you earn your living and where any additional money comes from. No matter the purpose, changing banks or moving money from one account to another may raise a red flag with the lender and slow down your approval process.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, delivered to his door. Until the completion of the deal, any good faith money actually belongs to you. The good faith funds are to go toward your expenses closing; a individual seller may not realize this. It's wise to put the funds into a trust account, or get an attorney to hold them until the deal closes. The purchase contract should dictate where the funds go if the transaction falls through.
At Peerless Residential Mortgage, we answer questions about this process every day. Give us a call at (513) 713-1515.