What to Avoid During a Home Purchase
Many new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller says "yes" and the lender approves the loan. There still remain a few major hurdles to jump before your loan closes. We have listed some actions below you will want to stay away from when waiting for your loan to close.
Don't overspend on big-ticket items Although you will be planning ways to turn your new home into a castle, try to stay away from big ticket purchases like appliances, electronics, or furniture. You will also want to avoid vacations and vehicle purchases until your loan closes. You may send up red flags with your lender if you purchase your electronics on your credit cards during your loan process. It's even a mistake to make those huge purchases using cash. Lending Institutions are examining your cash reserve when considering your loan.
Don't get a new career. Your recent job history should show consistency. Getting a new job before you start the application process for a loan may not jeopardize your approval at all. However, switching careers during your application process could affect your approval.
Don't move money around or change banks. Your lending institution will ask for recent bank statements for all of your accounts: savings, checking, money market, and other assets. In order to avoid fraud, lenders will need a clear and consistent picture of how you earn your money and where additional money comes from. Even for practical purposes, transferring cash or switching banks might make it more difficult for your lender to confirm your account history.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. Your good faith deposit does not belong to the seller: it is actually yours until the sale closes. The earnest funds are to go toward your expenses upon closing; some sellers might not know 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. The final disposition of earnest funds, if your sale fails, should be specified in the purchase agreement with the seller.
At U.S.A. Lending, Inc., we answer questions about this process every day. Call us: 305-967-7200.