What to Avoid During a Home Purchase
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, many homebuyers make the mistake of carrying their enthusiasm straight to the mall or furniture 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 stay away from during this critical time of your home purchase.
Don't make expensive purchases. Although you will be dreaming of ways to turn your new house into a showplace, try to stay away from major purchases like appliances, electronics, or furniture. You will also want to stay away from vacations and vehicle purchases until the closing of your loan. Using credit cards to buy new living room furniture could compromise your lending process by changing your numbers dramatically. Because lenders are perusing your financial accounts, a large cash purchase is also not advised.
Don't get a new career. Consistency in your career history is a positive thing to lending institutions. Getting a new job may not jeopardize your ability to qualify for a mortgage loan - especially if you are going to be making more money. But for some people, changing jobs during the mortgage approval process could raise concern and hinder your approval.
Don't switch banks or move money around in your accounts. While your lender considers your mortgage package, you will probably be asked to submit bank statements for the last two or three months on your saving and checking accounts, money market funds and other liquid wealth. To avoid fraud, lenders require clear documentation of how you earn your living and where any additional wealth comes from. No matter the reason, switching banks or moving money from one account to another can raise a red flag with your lender and impede your approval process.
Don't give money directly to your seller (generally in the case of of "for sale by owner") for earnest money. As a rule, your good faith deposit belongs to you, not the seller until the sale is final. Your seller may not realize that your good faith funds should go toward your expenses upon closing. A neutral party, like an attorney can hold onto your earnest funds, or you may place them temporarily into a trust account until closing. Should your home purchase fail, the purchase contract should indicate to whom this earnest money should go.
At VSI Home Lending, we answer questions about this process every day. Give us a call at 2603382561.