Things to Avoid While Purchasing a Home
Some new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller accepts their offer and the lender approves their loan. Keep in mind that until closing, your lender is watching your finances very closely. Below you'll find a list of actions to avoid during this crucial time of your home purchase.
Don't buy luxury items. It may be tempting to order that new sofa for the soon-to-be-yours parlor, but it's best to stay away from making major buys like furniture, appliances, electronic equipment, or cars until closing. Your credit numbers could be altered suddenly if you make a huge purchase using plastic. It's even a bad idea to make those huge purchases using cash. Lending Institutions are examining your cash reserve when considering your loan.
Don't look for a new career. Consistency in your career history is a positive thing to lending institutions. Getting a new career before you start the application process for a mortgage loan may not compromise your approval at all. But for some people, changing jobs during the loan application process could bring concern and stymie your approval.
Don't move cash around or switch banks. While the lender considers your mortgage application, you will probably be required to submit bank statements for the last two or three months for your checking and savings accounts, money market accounts and other liquid wealth. To avoid potential fraud, most loans require detailed paperwork to determine the source of all cash. Changing banks or transferring finances elsewhere - no matter the purpose - could hinder the review of your funds.
Don't give a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your earnest money belongs to you, not to the seller up until the deal closes. Although some individual sellers may not know this, your good faith money must go toward your closing expenses. An attorney or other type of neutral party can hold your funds, or you may put them temporarily into a trust account until closing. The final disposition of earnest funds, in the case of a failed transaction, should be written in the purchase agreement with your seller.
Rasmussen Mortgage can answer questions about these "Don'ts" and many others. Call us: 608-592-5600.