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 taking their enthusiasm straight to the mall or furniture store. Until the keys are handed over, there are still some hoops to jump through. Below you'll find a list of actions to avoid during this crucial time of your home purchase.
Don't overspend on 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. Your credit numbers could change suddenly if you make a huge purchase using credit cards. Because lending institutions are reviewing your bank accounts, a large cash purchase is also not advised.
Don't get a new career. Your recent career history should show consistency. Getting a new job may not jeopardize your ability to qualify for a mortgage loan - particularly if you are improving your salary. However, if you switch careers before approval, your process could fail or be bogged down.
Don't switch banks or move finances around in your bank accounts. While the lender considers your loan package, you will probably be asked to produce bank statements for the last two or three months for your checking and savings accounts, money market accounts and other liquid finances. To eliminate potential fraud, most lenders want a thorough paper trail to document the source of all incoming funds. Even for practical reasons, transferring money or switching banks could make it harder for your lending institution to confirm your bank history.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, made out directly to him. Until the sale is complete, the good faith deposit actually belongs to you. Some sellers may not realize that the good faith funds should be used for your expenses upon closing. It's wise to put the funds into a trust account, or get a neutral person, like a lawyer to hold them until the deal closes. The disposition of good faith money, in the case of a failed transaction, should be included in the purchase agreement with the seller.
At First Southeast Mortgage Corporation, we answer questions about this process every day. Give us a call: 954.920.9799.