What to Avoid During your Home Purchase
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of taking their enthusiasm straight to the mall or appliance store. Keep in mind that until you get the keys, your lender is watching you very closely. Below you'll find a list of actions to avoid during this critical time of your home purchase.
Don't throw your money around. You may be itching to turn your new living room into a showplace, or celebrate your new dream home, but keep away from big purchases like furniture, jewelry, appliances, or vacations until closing. Using credit cards to buy new living room furniture could jeopardize your loan process by changing your numbers dramatically. Since lending institutions are looking closely at your bank accounts, a large cash purchase is also not advised.
Don't go on a career search. Lenders look for a consistent career history on your paperwork. Changing jobs may not affect your ability to qualify for a mortgage loan - particularly if you are getting a better salary. However, if you switch careers before you qualify, your process could fail or be stalled.
Don't move money around or switch banks. Your lending institution will instruct the submission of recent bank statements for accounts in your name: savings, checking, money market, and other assets. To detect potential fraud, most loans need a thorough paper trail to determine the source of all funds. No matter the reason, moving banks or moving funds from one account to another might raise a red flag with the lender and impede your application process.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, made out directly to him. Until the completion of the deal, any good faith deposit actually belongs to you. Although your seller might not know this, the good faith funds must go toward the buyer's closing expenses. We recommend that you put the deposit into a trust account, or get an attorney to hold it until the deal closes. The disposition of good faith money, if your sale fails, should be written in the contract with the seller.
The Mortgage Exchange Service LLC can answer questions about these "Don'ts" and many others. Give us a call at 703.255-5810.