What to Avoid During a Home Purchase
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of taking their enthusiasm straight to the mall or appliance store. Until the house is really yours, there still remain some hurdles to jump. We have given you a list of things below you will want to avoid when waiting for closing.
Don't buy luxury items. You may be tempted to buy that new sofa for the soon-to-be-yours den, but it's best to stay away from making big ticket purchases like furniture, appliances, electronic equipment, or vacations 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. Since lenders are looking closely at your bank accounts, a large cash purchase is also not advised.
Don't go on a job search. Your recent job history should show consistency. Finding a new job (particularly one with a bigger paycheck) may not affect your ability to qualify for your loan. However, if you switch careers before your loan is approved, your loan process could fail or be slowed down.
Don't change banks or move cash around in your accounts. As the lending institution reviews your mortgage loan package, you will probably be required to submit bank statements for recent months for your checking and savings accounts, money market funds and other liquid wealth. To avoid potential fraud, most lenders require thorough paperwork to document the source of all incoming funds. No matter the reason, changing banks or transferring money may raise a red flag with your lender and impede your loan process.
Don't give cash directly to your seller (commonly in cases of "for sale by owner") to be used as earnest money. As a rule, your earnest money is yours, not the seller's up until the deal closes. The FSBO seller might not realize that any good faith money must be applied to your expenses at closing. A neutral party, like an attorney can hold onto your funds, or you may place them temporarily into a trust account until you close. Your contract should indicate to whom the funds go if the home purchase fails.
Longhorn Mortgage can answer questions about these "Don'ts" and many others. Call us: 512-302-9410.
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