What to Avoid During a Home Purchase
Some new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller accepts their offer and the loan is approved. It's wise to remember that until you get the keys, your lender is watching your accounts very closely. Below you'll find a list of things to stay away from during this crucial time of your home purchase.
Don't throw your money around. Although you will be listing ways to turn your new home into a showplace, avoid major purchases like appliances, electronics, or expensive furnishings. We also recommend that you stay away from vacations and vehicle purchases until the closing of your loan. Using plastic to buy new living room furniture could compromise your loan process by distorting your numbers. Because lending institutions are reviewing your financial accounts, a large cash purchase is also not advised.
Don't go on a job search. Lending Institutions like to see a consistent work history on your paperwork. Getting a new job may not jeopardize your ability to qualify for a mortgage loan - especially if you are getting a bigger paycheck. But for some people, changing careers during the loan approval process might bring concern and affect your approval.
Don't take your accounts to a new bank or move around your money. While your lender considers your mortgage application, you will likely be asked to provide bank statements for the last two or three months on your saving and checking accounts, money market funds and other liquid wealth. To eliminate potential fraud, most lending institutions want a thorough paper trail to determine the source of all cash. No matter the reason, switching banks or transferring funds might raise a red flag with your lender and slow down your approval process.
Don't deliver earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until closing, any good faith money remains yours. Although some individual sellers may not understand this, the earnest money should be applied to your closing expenses. We recommend that you put the funds into a trust account, or get a neutral person, like an attorney to hold them until the closing of the sale. The final disposition of good faith money, if your home purchase fails, should be written in the contract with the seller.
F&T Mortgage, Inc. NMLS # 168839 (www.nmlsconsumeraccess.org) can walk you through the pitfalls of getting a mortgage. Give us a call: 214-300-8756.