What to Avoid During a Home Purchase
With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of carrying their enthusiasm straight to the mall or appliance store. Until your keys are in hand, there are still some hoops to jump through. Below you'll find a list of actions to stay away from during this critical time of your home purchase.
Don't empty your wallet on big-ticket items Although you will be dreaming of ways to turn your new house into a showplace, try to stay away from big ticket purchases like appliances, electronics, or expensive furnishings. We also recommend that you keep away from vacations and vehicle purchases until the closing of your loan. Using plastic to buy furniture could compromise your lending process by distorting your numbers. Using cash to purchase big-ticket items can even be a mistake: many lending institutions consider your available cash when approving your mortgage loan.
Don't go on a job search. Your recent work history should show stability. Getting a new job may not compromise your ability to qualify for a mortgage loan - particularly if you are going to be making more money. However, if you switch careers before you qualify, your loan process could fail or be bogged down.
Don't change banks or move money around in your accounts. Your lender will instruct the submission of recent bank statements on your accounts: checking, savings, money market, and other liquid assets. Your lender is looking for a steady flow of your funds over the month, in the interest of avoiding fraud. No matter the reason, switching banks or transferring money can raise a red flag with your lender and impede your loan process.
Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. Your good faith deposit does not belong to the seller: it is actually yours until closing. The good faith funds are to be used for your expenses closing; some sellers may not understand this. It's advisable to put the funds into a trust account, or get an attorney to hold them until closing. If your sale falls through, the purchase contract should specify to whom this earnest money should go.
At The Mortgage Exchange Service LLC, we answer questions about this process every day. Give us a call: 703.255-5810.