What to Avoid During a Home Purchase
Many new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller accepts their offer and the lender approves their loan. 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 stay away from during this crucial time of your home purchase.
Don't buy luxury items. It may be tempting to order that new Turkish rug for the soon-to-be-yours living room, but it's best to avoid making major buys like furniture, appliances, electronic equipment, or vacations until closing. Your lender may send up red flags if you buy your appliances on your credit cards during your loan process. Using cash to purchase big items can even create an issue: most banks consider your cash on hand when approving your mortgage.
Don't look for a new career. Lending Institutions like to see a consistent career history on your application forms. Finding a new career (particularly one with a bump in salary) may not jeopardize your ability to qualify for your mortgage loan. However, getting a new job in the middle of your application process could affect whether or not you are approved.
Don't switch your accounts to a new bank or move around your money. Your lending institution will ask for recent bank statements of all of your accounts: savings, checking, money market, and other liquid assets. To avoid fraud, lenders want to see a clear and consistent picture of how you earn your living and where any additional funds come from. Even for innocent reasons, transferring cash or switching banks could make it harder for the lending institution to verify your account history.
Don't hand over a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Until the sale is complete, any good faith money remains yours. The good faith funds are to go toward your expenses upon closing; your individual seller might not know this. Get a lawyer or other neutral person who can hold the deposit or place it in a trust account until you close. The disposition of earnest funds, in the case of a failed transaction, should be written in the purchase agreement with your seller.
Crown Mortgage can answer questions about these "Don'ts" and many others. Call us: (434) 975-5626.
Got a Question?
Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.