What to Avoid During your Home Purchase
With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of carrying their enthusiasm straight to the mall or furniture store. Keep in mind that until your keys are in hand, your lender is watching your finances very closely. Below you'll find a list of things to avoid during this crucial time of your home purchase.
Don't empty your wallet on big-ticket items Although you will be dreaming of ways to turn your new home into a castle, avoid big ticket purchases like appliances, electronics, or expensive furnishings. 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 buy new appliances on your credit cards during your loan process. Using cash to purchase big-ticket items can also create an issue: many banks consider your cash on hand when approving your mortgage loan.
Don't look for a new career. Consistency in your job history is a good thing to lending institutions. Getting a new job before you start the application process for a mortgage loan may not jeopardize your approval at all. But in some cases, changing careers during the loan application process may bring concern and hinder your application.
Don't switch your accounts to a new bank or move around your finances. Your lender will ask for recent bank statements on all of your accounts: savings, checking, money market, and other assets. To eliminate potential fraud, most lenders need thorough paperwork to document the source of all funds. Even for practical purposes, moving around finances or changing banks could make it more difficult for the lending institution to confirm your account history.
Don't give money directly to your seller (generally in cases of "for sale by owner") to be considered a "good faith" deposit. Until the sale is complete, any earnest money actually belongs to you. Your earnest money is to go toward your expenses upon closing; some sellers might not understand this. You'll need to put the money into a trust account, or get a neutral party, like an attorney, to hold it until the deal closes. The disposition of earnest funds, in the case of a failed transaction, should be indicated in the purchase agreement with the seller.
Southwest Funding #841 can answer questions about these "Don'ts" and many others. Give us a call: (512) 291-6100.