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 mistake of taking their enthusiasm straight to the mall or appliance store. Keep in mind that until your keys are in hand, your lender is watching your accounts very closely. Below you'll find a list of actions to avoid during this critical time of your home purchase.
Don't make expensive purchases. You may be itching to turn your new living room into a showplace, or celebrate your new dream home, but keep away from major purchases like furniture, cars, appliances, or vacations until closing. Your lender may send up red flags if you finance new appliances on your credit cards in the middle of your loan process. Because lending institutions are reviewing your financial accounts, a large cash purchase is also a bad idea.
Don't go on a career search. Your recent work history should show consistency. Finding a new career (particularly one with a better paycheck) may not affect your ability to qualify for a mortgage. However, switching jobs in the middle of the application process could affect your approval.
Don't switch your accounts to a new bank or move around your cash. Bank statements from the last two or three months for accounts in your name (checking, savings, money market, and other accounts) will probably be analyzed as the lending institution makes decisions regarding your approval. To detect potential fraud, most lenders require a detailed paper trail to document the source of all funds. Changing banks or moving money to another account - even if its only to consolidate funds - could make it harder for the lender to review your funds.
Don't give funds directly to your seller (commonly in the case of of "for sale by owner") for a "good faith" deposit. As a rule, your earnest money is yours, not the seller's until closing. Your seller may not realize that this earnest money is to go toward your expenses at closing. We recommend that you put the deposit into a trust account, or get a neutral party, like an attorney, to hold it until closing. The final disposition of earnest funds, in the case of a failed transaction, should be written in the purchase agreement with your seller.
The Mortgage Firm - Team Meyers can answer questions about these "Don'ts" and many others. Give us a call at (407) 889-4321.