What to Avoid During a Home Purchase
Some new home buyers 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. Please Don't! There are still a few major hurdles to jump before your loan closes. Here are some actions to stay clear of during the home buying process to be sure the transaction goes smoothly.
Don't empty your wallet on big-ticket items You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new dream home, but stay away from major purchases like furniture, cars, appliances, or vacations until the loan closes. Your credit numbers could be altered suddenly if you make a huge purchase using plastic. Because lending institutions are examining your financial accounts, a large cash purchase is also a bad idea. Cash (in bank) is King!
Don't get a new job. Consistency in your career history is a good thing to banks and other lenders. Getting a new career before you start the application process for a mortgage loan may not compromise your approval at all. However, if you switch careers before you qualify, your process could fail or be slowed down. Please call us to help!
Don't switch banks or move money around in your bank accounts. Bank statements from the last two or three months for your accounts (checking, savings, money market, and others) will be reviewed as the lending institution makes decisions regarding your application. To eliminate potential fraud, most lenders require a thorough paper trail to determine the source of all incoming funds. No matter the purpose, moving banks or moving money from one account to another can raise a red flag with your lender and slow your loan process. Please ask us what is considered a large deposit.
Don't give funds directly to your seller (commonly in cases of "for sale by owner") to be considered a "good faith" deposit. As a rule, your good faith deposit is yours, not the seller's up until closing. Although your FSBO seller might not understand this, the earnest money should be used for your closing expenses. Find an attorney or other neutral party who is able to hold the funds or put them in a trust account until you close. The final disposition of good faith money, if your home purchase falls through, should be included in the purchase agreement with your seller.
At AmeriBest Mortgage, we answer questions about this process every day. Call us (321) 777-7277.