Things to Avoid While Purchasing a Home
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of taking their enthusiasm straight to the mall or appliance store. Until closing, there are still some hoops to jump through. Here are some things to stay clear of before closing to be sure the transaction goes smoothly.
Don't make expensive purchases. Although you will be dreaming of ways to turn your new house into a castle, avoid major purchases like appliances, electronics, or furniture. You will also want to stay away from vacations and vehicle purchases until your loan closes. Your lender may send up red flags if you purchase your electronics on your credit cards in the middle of your loan process. Using cash to purchase expensive items can even be an issue: most banks take into consideration your cash on hand when approving your loan.
Don't get a new job. Your recent work history should show stability. Finding a new job (particularly one with a better salary) may not hinder your ability to qualify for your mortgage. However, if you switch careers before your loan is approved, your process could fail or be bogged down.
Don't take your accounts to a new bank or move around your cash. While your lender reviews your loan package, you will probably be instructed to produce bank statements for the last two or three months on your saving and checking accounts, money market accounts and other liquid finances. The lender is looking for a steady flow of your money over the pay period, in order to rule out fraud. No matter the reason, changing banks or transferring funds can raise a red flag with the lender and slow your approval process.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, made out directly to him. Your good faith deposit does not belong to the seller: it remains yours until closing. Your seller might not realize that the good faith funds must be used for your expenses upon closing. You'll need to put the deposit into a trust account, or get an attorney to hold it until the deal closes. The final disposition of good faith funds, in the case of a failed transaction, should be indicated in the purchase agreement with the seller.
At First Southeast Mortgage Corporation, we answer questions about this process every day. Call us at 954.920.9799.