What to Avoid During your Home Purchase
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the error of taking their enthusiasm straight to the mall or appliance store. There still remain a few major hurdles to jump before your loan closes. We have listed some actions below you will want to stay away from when waiting for your loan to close.
Don't make expensive purchases. You may be itching to buy that new sofa for the soon-to-be-yours den, but it's best to avoid making large buys like furniture, appliances, electronic equipment, or vacations until closing. Your lender may send up red flags if you purchase new furniture on your credit cards during your loan process. Because lenders are looking closely at your bank accounts, a large cash purchase is also a mistake.
Don't go on a career search. Stability in your job history is a positive thing to banks and other lenders. Finding a new job (particularly one with a bigger salary) may not affect your ability to qualify for your mortgage loan. However, if you switch careers before your loan is approved, your loan process could fail or be stalled.
Don't change banks or move cash around in your accounts. Bank statements from recent months for accounts in your name (savings, checking, money market, and other accounts) will probably be reviewed as the lending institution makes decisions regarding your loan application. To detect potential fraud, most loans require a thorough paper trail to document the source of all funds. Switching banks or moving funds to another account - for whatever purpose - may make it difficult for the lender to verify your funds.
Don't give cash directly to your seller (commonly in cases of "for sale by owner") for earnest money. Your good faith money does not belong to the seller: it remains yours until the sale closes. The earnest money is to be used for your expenses closing; some sellers might not realize this. Find a lawyer or other neutral person who is able to hold the funds or put them in a trust account until you close. The final disposition of good faith money, in the case of a failed transaction, should be specified in the contract with your seller.
At Home Mortgage Lenders, Inc., we answer questions about this process every day. Call us at 8139881776.