What to Avoid During your Home Purchase
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the error of taking their enthusiasm straight to the mall or furniture store. Until your keys are in hand, there still remain some hurdles to jump. Here are some things to avoid during the home buying process to be sure your transaction goes well.
Don't buy luxury items. It may be tempting to buy that new Turkish rug for the soon-to-be-yours den, but it's advisable to stay away from making large purchases like furniture, appliances, electronic equipment, or cars until closing. Financing your furniture with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. Using cash to purchase big-ticket items can even create a problem: most banks take into consideration your cash reserve when approving your loan.
Don't get a new job. Your recent work history should show stability. Changing jobs may not compromise your ability to qualify for a loan - especially if you are getting a better salary. However, getting a new job in the middle of the application process may influence whether or not you are approved.
Don't change banks or move money around in your bank accounts. While the lender considers your mortgage package, you will probably be required to provide bank statements for recent months on your checking and savings accounts, money market funds and other liquid finances. To detect fraud, lenders require clear documentation of how you earn your money and where any additional wealth comes from. Even for innocent reasons, transferring cash or changing banks may make it harder for your lender to verify your bank history.
Don't deliver earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your good faith deposit does not belong to the seller: it remains yours until the sale closes. Some sellers may not realize that these good faith funds is to go toward your expenses upon closing. Find a lawyer or other neutral person who can hang on to the funds or put them in a trust account until you close. The final disposition of good faith money, in the case of a failed transaction, should be included in the contract with your seller.
U.S.A. Lending, Inc. can walk you through the pitfalls of getting a mortgage. Call us: 305-967-7200.