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. It's best to remember that until you get the keys, your lender is watching you very closely. Here are some things to avoid before closing to assure your transaction goes well.
Don't empty your wallet on big-ticket items You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new dream home, but keep away from expensive purchases like furniture, jewelry, appliances, or vacations until closing. Your lender may send up red flags if you finance new furniture on your credit cards in the middle of your loan process. Because lending institutions are perusing your bank accounts, a large cash purchase is also a mistake.
Don't look for a new job. Lending Institutions look for a consistent career history on your application. Changing jobs may not affect your ability to qualify for a mortgage loan - particularly if you are going to be making more money. However, getting a new career in the middle of the loan process could affect whether or not you are approved.
Don't switch your accounts to a new bank or move around your finances. Bank statements from recent months for accounts in your name (savings, checking, money market, and others) will be studied as the lender considers your approval. The lending institution looks for a consistent flow of your money each pay period, in the interest of avoiding fraud. Changing banks or moving finances to another account - no matter the purpose - might hinder the review of your accounts.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, made out directly to him. Your good faith money does not belong to the seller: it remains yours until the sale closes. Although some FSBO sellers may not know this, your good faith money must be used for your closing expenses. An attorney or other type of neutral party can hold your earnest funds, or you may place them temporarily into a trust account until you close. The disposition of good faith funds, if your transaction falls through, should be indicated in the purchase agreement with the seller.