What to Avoid During a Home Purchase
Some 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. There are still a few major hurdles to jump before the keys are handed over. Below you'll find a list of things to stay away from during this critical time of your home purchase.
Don't make expensive purchases. Although you may be planning ways to turn your new home into a showplace, avoid big ticket purchases like appliances, electronics, or furniture. You will also want to avoid vacations and car purchases until your loan closes. Using credit cards to buy new living room furniture could compromise your lending process by changing your numbers dramatically. It's also a red flag to make those large purchases with cash. Lending Institutions are looking at your cash reserve when considering your 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 - especially if you are going to be making more money. But for some, changing careers during the mortgage approval process could raise concern and hinder your application.
Don't switch banks or move money around in your bank accounts. Most lenders will require you to produce recent bank statements on accounts in your name: checking, savings, money market, and other liquid assets. The lending institution is looking for a consistent rise and fall of your money over the month, in order to rule out fraud. Even for practical purposes, moving around funds or switching banks could make it harder for your lending institution to verify your account history.
Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your earnest money is yours, not the seller's until closing. A FSBO seller might not realize that this earnest money is to go toward your expenses at closing. It's wise to put the funds into a trust account, or get a neutral party, like an attorney to hold them until closing. The contract should specify where the money goes if the transaction falls through.
The Mortgage Exchange Service LLC can answer questions about these "Don'ts" and many others. Call us: 703.255-5810.