What to Avoid During your Home Purchase
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With the thrill 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 the keys are handed over, there still remain some hoops to jump through. We have given you a list of things below you will want to stay away from when waiting for your loan to close.
Don't throw your money around. Although you may be dreaming of ways to turn your new house into a showplace, avoid major purchases like appliances, electronics, or furniture. We also recommend that you avoid vacations and car purchases until your loan closes. Financing your Plasma TVs with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. It's even a red flag to make those large purchases using cash. Lenders are looking at your cash reserve when considering your loan.
Don't go on a career search. Lending Institutions look for a consistent career history on your application. Finding a new job (especially one with a bump in salary) may not jeopardize your ability to qualify for your mortgage loan. But for some people, changing careers during the loan application process might bring concern and affect your application.
Don't change banks or move cash around in your accounts. As your lender reviews your loan application, you will likely be required to submit bank statements for the last two or three months on your checking accounts, savings accounts, money market accounts and other liquid wealth. To avoid potential fraud, most lending institutions want a detailed paper trail to document the source of all cash. Even for practical reasons, moving around money or switching banks might make it harder for your lending institution to confirm your bank history.
Don't give cash directly to your seller (commonly in cases of "for sale by owner") to be considered earnest money. As a rule, your earnest money belongs to you, not to the seller up until the sale is final. Your earnest funds are to be used for your expenses upon closing; a individual seller may not understand this. We recommend that you put the funds into a trust account, or get a neutral party, like a lawyer to hold them until closing. The final disposition of good faith funds, in the case of a failed transaction, should be documented in the purchase agreement with the seller.
America's Mortgage Link, Inc. NMLS#210275 can answer questions about these "Don'ts" and many others. Call us: 727-393-9399.