Things to Avoid While Purchasing a Home
With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the mistake of carrying their enthusiasm straight to the mall or appliance store. There still remain a few major hurdles to jump before your loan closes. Here are some things to avoid during the home buying process to assure the transaction goes well.
Don't empty your wallet on big-ticket items Although you may be listing ways to turn your new home into a showplace, avoid big ticket purchases like appliances, electronics, or expensive furnishings. You will also want to avoid vacations and vehicle purchases until the closing of your loan. Your lender may send up red flags if you finance your appliances on your credit cards during your loan process. It's even a red flag to make those big purchases using cash. Lenders are examining your available cash when considering your loan.
Don't go on a career search. Consistency in your job history is a positive thing to lenders. Getting a new job may not affect your ability to qualify for a loan - particularly if you are getting a bigger paycheck. However, if you switch careers before you qualify, your loan process could fail or be slowed down.
Don't move money around or switch banks. Bank statements from the last few months for accounts in your name (checking, savings, money market, and other accounts) will likely be analyzed as the lender considers your application. In order to eliminate fraud, lenders want to see a clear and consistent picture of how you earn your living and where additional money comes from. Even for practical reasons, transferring finances or switching banks might make it difficult for your lending institution to verify your bank history.
Don't give your FSBO (for sale by owner) seller earnest money, delivered to his door. Your good faith deposit does not belong to the seller: it remains yours until closing. Although your seller may not understand this, your good faith money should be applied to your closing expenses. An attorney or other type of neutral party can hold your funds, or you may put them temporarily into a trust account until closing. If your transaction fails, the purchase contract should specify where this earnest money should go.
At Homewood Mortgage, Inc., we answer questions about this process every day. Call us at 205-941-1484.