What to Avoid During a Home Purchase
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In the rush of excitement that comes with an accepted offer and a "yes" from the lender, many homebuyers make the mistake of bringing their enthusiasm straight to the mall or furniture store. There still remain a few major hurdles to jump before the house is really yours. We have given you a list of actions below you will want to avoid when waiting for closing.
Don't overspend on big-ticket items Although you may be planning ways to turn your new house into a castle, try to stay away from 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. You may send up red flags with your lender if you purchase new electronics on your credit cards during your loan process. It's even a mistake to make those large purchases using cash. Lending Institutions are looking at your available cash when considering your loan.
Don't go on a career search. Your recent work history should show stability. Changing jobs may not compromise your ability to qualify for a loan - especially if you are improving your salary. But for some, switching jobs during the loan approval process could raise concern and affect your approval.
Don't switch banks or move finances around in your accounts. Bank statements from recent months for all of your accounts (checking, savings, money market, and other assets) will be reviewed as the lending institution makes decisions regarding your application. To detect potential fraud, most lenders want a detailed paper trail to verify the source of all cash. No matter the purpose, moving banks or transferring money can raise a red flag with the lender and slow your loan process.
Don't give a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Until the completion of the deal, any good faith money actually belongs to you. Although your seller might not understand this, the earnest money should be used for your closing expenses. Find a lawyer or other neutral person who is able to hang on to the deposit or place it in a trust account until you close. Your purchase agreement should specify to whom the funds go if the transaction does not go through.
Metro Mortgage Lending can answer questions about these "Don'ts" and many others. Call us at 502-491-0749.