What to Avoid During a Home Purchase
Many new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller says "yes" and the loan is approved. There still remain a few major hurdles to jump before your loan closes. Here are some actions to refrain from during the home buying process to be sure the transaction goes smoothly.
Don't overspend on big-ticket items You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new dream home, but stay away from major purchases like furniture, jewelry, appliances, or vacations until your loan closes. Your lender may send up red flags if you buy your furniture on your credit cards in the middle of your loan process. Since lenders are looking closely at your financial accounts, a large cash purchase is also a bad idea.
Don't go on a job search. Your recent work history should show stability. Getting a new job may not jeopardize your ability to qualify for a mortgage loan - particularly if you are getting a bigger paycheck. However, if you switch careers before approval, your mortgage process could fail or be bogged down.
Don't change banks or move finances around in your accounts. Bank statements from recent months for your accounts (savings, checking, money market, and other accounts) will likely be studied as the lending institution considers your application. To detect fraud, lenders want to see clear documentation of how you earn your living and where any additional money comes from. No matter the purpose, moving banks or transferring funds can raise a red flag with the lender and slow your qualification process.
Don't give cash directly to your seller (generally in the case of of "for sale by owner") to be considered a "good faith" deposit. Until the completion of the deal, the good faith deposit remains yours. Although your seller may not realize this, your good faith money should be applied to your closing expenses. We recommend that you put the funds into a trust account, or get a neutral party, like a lawyer to hold them until the closing of the sale. If your sale falls through, the contract with the seller should indicate to whom your earnest money should go.
U.S.A. Lending, Inc. can walk you through the pitfalls of getting a mortgage. Call us: 305-967-7200.