What to Avoid During a Home Purchase
With the thrill that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of carrying their enthusiasm straight to the mall or furniture store. There are still a few major hurdles to jump before the keys are handed over. Here are some things to stay clear of during the home buying process to assure the transaction goes smoothly.
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 advisable to avoid making major purchases like furniture, appliances, jewelry, or vacations until your home loan closes. Your credit numbers could change suddenly if you purchase new furniture using credit cards. Using cash to buy big-ticket items can even be a mistake: many lending institutions consider your available cash when approving your loan.
Don't get a new job. Your recent career history should show stability. Finding a new career (especially one with a better salary) may not change your ability to qualify for a loan. However, if you switch careers before you qualify, your process could fail or be stalled.
Don't move cash around or switch banks. While your lending institution considers your mortgage package, you will probably be asked to produce bank statements for the last two or three months on your saving and checking accounts, money market funds and other liquid wealth. To avoid potential fraud, most loans want a detailed paper trail to document the source of all incoming funds. No matter the reason, switching banks or moving funds from one account to another could raise a red flag with your lender and slow down your loan process.
Don't give a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Until the completion of the deal, the good faith deposit actually belongs to you. The good faith funds are to be applied to your expenses closing; your FSBO seller might not realize this. We recommend that you put the deposit into a trust account, or get an attorney to hold it until the closing of the sale. Should your home purchase fail, your purchase agreement should specify where the earnest money should go.
At Mortgage Max Inc, we answer questions about this process every day. Call us at 760-547-2080.