What to Avoid During your Home Purchase
Some new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller says "yes" and the loan is approved. There are still a few major hurdles to jump before the house is realy yours. Below you'll find a list of things to stay away from during this critical time of your home purchase.
Don't overspend on big-ticket items You may be itching to turn your new living room into a home magazine cover, or celebrate your new castle, but stay away from big purchases like furniture, jewelry, appliances, or vacations until your loan closes. Financing new bedroom furniture with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. Because lenders are perusing your financial accounts, a large cash purchase is also not advised.
Don't look for a new job. Stability in your career history is a positive thing to lenders. Getting a new job may not compromise your ability to qualify for a loan - particularly if you are getting a bigger paycheck. However, switching jobs in the middle of the loan process could affect whether or not you are approved.
Don't take your accounts to a new bank or move around your finances. Your lending institution will ask for recent bank statements for all of your accounts: checking, savings, money market, and other liquid assets. The lending institution is looking for a consistent rise and fall of your funds over the month, in order to avoid fraud. Switching banks or transferring funds to another account - no matter the reason - could make it difficult for the lender to verify your funds.
Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. As a rule, your earnest money belongs to you, not the seller until closing. Any earnest money is to go toward your expenses closing; some sellers may not understand this. An attorney or other type of neutral party can hang onto your earnest money, or you may put it temporarily into a trust account until you close. Should your home purchase fail, the purchase agreement should specify where your earnest money should go.
The Mortgage Exchange Service LLC can answer questions about these "Don'ts" and many others. Give us a call at 703.255-5810.