Things to Avoid While Purchasing a Home
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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 furniture store. It's best to remember that until closing, your lender is watching your finances very closely. Below you'll find a list of things to stay away from during this crucial time of your home purchase.
Don't make expensive purchases. Although you may be listing ways to turn your new home into a castle, try to stay away from major purchases like appliances, electronics, or expensive furnishings. We also recommend that you stay away from vacations and vehicle purchases until your loan closes. Financing your Plasma TVs with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. It's also a red flag to make those huge purchases using cash. Lending Institutions are looking at your cash on hand when considering your loan.
Don't go on a job search. Lending Institutions like to see a consistent career history on your application forms. Changing jobs may not jeopardize your ability to qualify for a loan - particularly if you are improving your salary. However, if you switch careers before approval, your mortgage process could fail or be slowed down.
Don't take your accounts to a new bank or move around your finances. Your lending institution will require you to produce recent bank statements on accounts in your name: checking, savings, money market, and other liquid assets. To detect potential fraud, most loans need detailed paperwork to determine the source of all cash. No matter the purpose, moving banks or moving money from one account to another could raise a red flag with your lender and slow your qualification process.
Don't give money directly to your seller (commonly in cases of "for sale by owner") to be considered earnest money. As a rule, your earnest money is yours, not the seller's until closing. Some FSBO sellers might not know that the earnest money is to go toward your expenses upon closing. You'll need to put the funds into a trust account, or get a neutral party, like an attorney to hold them until the deal closes. The purchase agreement should indicate who gets the deposit if the home purchase fails.