Things to Avoid While Buying a Home
With the thrill 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 loan closes, there are still some hurdles to jump. Here are some things to refrain from before closing to be sure the transaction goes well.
Don't make expensive purchases. Although you will be listing ways to turn your new house into a showplace, avoid big ticket purchases like appliances, electronics, or expensive furnishings. You will also want to avoid vacations and vehicle purchases until your loan closes. Using plastic to buy new living room furniture could compromise your lending process by distorting your numbers. Using cash to purchase big items can even create a mistake: most banks look at your cash reserve when approving your application.
Don't go on a job search. Your recent career history should show consistency. Getting a new job may not compromise your ability to qualify for a mortgage loan - especially if you are improving your salary. However, if you switch careers before approval, your process could fail or be bogged down.
Don't change banks or move money around in your bank accounts. Most lenders will ask for recent bank statements on accounts in your name: savings, checking, money market, and other liquid assets. Your lender will need to see a steady rise and fall of your money over the pay period, in order to avoid fraud. Switching banks or transferring money to another account - even if its just to pool funds - might make it harder for the lender to verify your funds.
Don't give money directly to your seller (commonly in cases of "for sale by owner") for earnest money. As a rule, your good faith money belongs to you, not the seller up until closing. Some sellers may not realize that this earnest money should be applied to your expenses upon closing. Find a lawyer or other neutral person who will hang on to the funds or place them in a trust account until closing. Should your sale fall through, the purchase agreement should dictate to whom this good faith deposit should go.
At Southwest Funding #841, we answer questions about this process every day. Call us: (512) 291-6100.