What to Avoid During a Home Purchase
Many new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller says "yes" and the lender approves the loan. Keep in mind that until your keys are in hand, your lender is watching you very closely. Here are some things to avoid during the home buying process to be sure your transaction goes well.
Don't throw your money around. It may be tempting to order that new sofa for the soon-to-be-yours living room, but it's advisable to avoid making large buys like furniture, appliances, jewelry, or cars until your home loan closes. You may send up red flags with your lender if you buy new appliances on your credit cards in the middle of your loan process. Since lending institutions are looking closely at your bank accounts, a large cash purchase is also a bad idea.
Don't go on a career search. Lending Institutions like to see a consistent work history on your application. Finding a new job (particularly one with a bigger salary) may not hinder your ability to qualify for your mortgage. However, if you switch careers before your loan is approved, your process could fail or be slowed down.
Don't take your accounts to a new bank or move around your finances. Bank statements from recent months for all of your accounts (savings, checking, money market, and other accounts) will be studied as the lending institution makes decisions regarding your loan application. To avoid potential fraud, most lending institutions need thorough paperwork to verify the source of all cash. No matter the purpose, switching banks or moving funds from one account to another may raise a red flag with the lender and slow down your approval process.
Don't give a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Your earnest money does not belong to the seller: it is actually yours until closing. Although your seller may not realize this, any earnest money must go toward your closing expenses. Get a lawyer or other neutral person who is able to hang on to the funds or put them in a trust account until closing. The final disposition of earnest money, in the case of a failed transaction, should be indicated in the contract with your seller.
At Brimor National Mortgage, we answer questions about this process every day. Call us at 949-544-4908.
Got a Question?
Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.