What to Avoid During your Home Purchase
Many new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller says "yes" and the loan is approved. It's best to remember that until closing, your lender is watching you very closely. Here are some things to refrain from before closing to assure the transaction goes well.
Don't empty your wallet on big-ticket items Although you will be listing ways to turn your new house into a castle, try to stay away from big ticket purchases like appliances, electronics, or expensive furnishings. We also recommend that you avoid vacations and vehicle purchases until the closing of your loan. Using plastic to buy furniture could compromise your loan process by distorting your numbers. Using cash to purchase big-ticket items can also be a problem: most banks take into consideration your cash on hand when approving your application.
Don't look for a new career. Stability in your career history is a good thing to banks and other lenders. Changing jobs may not compromise your ability to qualify for a loan - particularly if you are going to be making more money. However, if you switch careers before your loan is approved, your mortgage process could fail or be slowed down.
Don't switch your accounts to a new bank or move around your money. While the lending institution considers your mortgage application, you will probably be asked to submit bank statements for recent months on your checking and savings accounts, money market funds and other liquid assets. To eliminate potential fraud, most lending institutions want a thorough paper trail to determine the source of all cash. Changing banks or transferring finances to another account - no matter the purpose - could make it harder for your lender to verify your funds.
Don't give funds directly to your seller (usually in cases of "for sale by owner") for earnest money. Your earnest money does not belong to the seller: it remains yours until closing. The good faith money is to go toward your expenses upon closing; a individual seller may not understand this. We recommend that you put the funds into a trust account, or get an attorney to hold them until the closing of the sale. Your contract should document where the deposit goes if the transaction fails.
U.S.A. Lending, Inc. can answer questions about these "Don'ts" and many others. Give us a call: 305-967-7200.