What to Avoid During your Home Purchase
Some 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. Keep in mind that until you get the keys, your lender is watching your finances very closely. Below you'll find a list of actions to avoid during this critical time of your home purchase.
Don't buy big-ticket items. You may be itching to turn your new living room into a home magazine cover, or celebrate your new castle, but keep away from expensive purchases like furniture, cars, appliances, or vacations until closing. You may send up red flags with your lender if you purchase your electronics on your credit cards during your loan process. Since lending institutions are looking closely at your bank accounts, a large cash purchase is also not advised.
Don't go on a job search. Your recent career history should show consistency. Getting a new job may not affect your ability to qualify for a loan - especially if you are getting a better salary. However, switching careers during your application process could influence whether or not you are approved.
Don't change banks or move money around in your accounts. Your lender will instruct the submission of recent bank statements on all of your accounts: checking, savings, money market, and other assets. To avoid fraud, lenders need a clear and consistent picture of how you earn your money and where any additional money comes from. No matter the purpose, moving banks or moving funds from one account to another can raise a red flag with your lender and slow your approval process.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. Until closing, the earnest money actually belongs to you. Any earnest funds are to be used for your expenses upon closing; some FSBO sellers may not know this. It's advisable to put the deposit into a trust account, or get a neutral party, like an attorney, to hold it until the closing of the sale. The final disposition of earnest money, in the case of a failed transaction, should be documented in the purchase agreement with the seller.
At Metro Mortgage, we answer questions about this process every day. Give us a call at 866-300-1550.