What to Avoid During your Home Purchase
With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the mistake of taking their enthusiasm straight to the mall or furniture store. Until closing, there are still some hoops to jump through. Below you'll find a list of things to stay away from during this crucial time of your home purchase.
Don't overspend on big-ticket items Although you will be listing ways to turn your new house into a showplace, try to stay away from big ticket purchases like appliances, electronics, or furniture. We also recommend that you avoid vacations and vehicle purchases until your loan closes. Financing new bedroom furniture with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. It's also a red flag to make those large purchases using cash. Lenders are looking at your cash reserve when considering your loan.
Don't go on a job search. Consistency in your job history is a good thing to lending institutions. Getting a new job before you apply for a mortgage loan may not jeopardize your approval at all. However, switching careers during the approval process may affect your approval.
Don't move money around or switch banks. Your lender will require you to produce recent bank statements on all of your accounts: savings, checking, money market, and other liquid assets. To avoid potential fraud, most lending institutions need thorough paperwork to document the source of all cash. No matter the purpose, changing banks or moving funds from one account to another can raise a red flag with the lender and slow down your application process.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. Your good faith money does not belong to the seller: it remains yours until closing. Although your FSBO seller may not understand this, any good faith funds should be applied to the buyer's closing expenses. Get an attorney or other neutral party who can hang on to the money or put it in a trust account until closing. The disposition of good faith funds, in the case of a failed transaction, should be specified in the contract with the seller.
American Mortgage Advisers, Inc can answer questions about these "Don'ts" and many others. Give us a call: 214-865-7442.
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