What to Avoid During your Home Purchase
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of taking their enthusiasm straight to the mall or appliance store. There still remain a few major hurdles to jump before the keys are handed over. Below you'll find a list of actions to avoid during this crucial time of your home purchase.
Don't buy luxury items. You may be itching to turn your new living room into a showplace, or celebrate your new castle, but stay away from big purchases like furniture, jewelry, appliances, or vacations until closing. Financing your furniture with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. Since lending institutions are perusing your financial accounts, a large cash purchase is also not advised.
Don't look for a new career. Consistency in your work history is a good thing to banks and other lenders. Finding a new career (especially one with a bump in salary) may not affect your ability to qualify for a mortgage. But for some people, switching jobs during the mortgage loan application process may raise concern and stymie your approval.
Don't switch banks or move finances around in your bank accounts. While your lender reviews your mortgage loan application, you will likely be instructed to submit bank statements for the last few months on your checking accounts, savings accounts, money market funds and other liquid assets. Your lending institution is looking for a steady flow of your funds each pay period, in the interest of avoiding fraud. No matter the purpose, switching banks or moving funds from one account to another might raise a red flag with your lender and slow down your loan process.
Don't deliver a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Until closing, the good faith deposit actually belongs to you. Your seller might not know that these good faith funds must be applied to your expenses upon closing. A neutral party, like an attorney can hold onto your earnest money, or you may put it temporarily into a trust account until closing. The disposition of earnest money, if your sale fails, should be included in the purchase agreement with your seller.
At Price Mortgage Group LLC, we answer questions about this process every day. Give us a call at 405-513-7700.