What to Avoid During your 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 loan is approved. Until closing, there are still some hoops to jump through. Below you'll find a list of actions to avoid during this crucial time of your home purchase.
Don't buy luxury items. You may be tempted to order that new Turkish rug for the soon-to-be-yours parlor, but it's best to stay away from making large buys like furniture, appliances, electronic equipment, or cars until closing. Financing your bedroom furniture with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. Using cash to buy big-ticket items can even create a mistake: many lenders consider your available cash when approving your loan.
Don't look for a new career. Your recent job history should show consistency. Finding a new job (particularly one with a better paycheck) may not affect your ability to qualify for your loan. However, getting a new career in the middle of your approval process may affect whether or not you are approved.
Don't take your accounts to a new bank or move around your finances. 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 avoid potential fraud, most loans want a detailed paper trail to verify the source of all incoming funds. Even for innocent reasons, moving around money or switching banks may make it harder for your lender to verify your account history.
Don't give money directly to your seller (usually in cases of "for sale by owner") for a "good faith" deposit. Your earnest money does not belong to the seller: it remains yours until the transaction is final. Although your FSBO seller might not understand this, any good faith funds should go toward your closing expenses. An attorney or other type of neutral party can hold your deposit, or you may put it temporarily into a trust account until you close. The purchase agreement should indicate who gets the deposit if the home purchase falls through.
At The Mortgage Exchange Service LLC, we answer questions about this process every day. Give us a call: 703.255-5810.