Dont's When Purchasing a Home
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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 excitement straight to the mall or appliance store. Until your keys are in hand, there still remain some hurdles to jump. We have given you a list of actions below we suggest you avoid when waiting for closing.
Don't overspend on big-ticket items You may be tempted to order that new couch for the soon-to-be-yours living room, but it's advisable to stay away from making large purchases like furniture, appliances, electronic equipment, or cars until your home loan closes. Using plastic to buy new living room furniture could compromise your lending process by changing your numbers dramatically. It's also a red flag to make those large purchases using cash. Lending Institutions are looking at your cash reserve when considering your loan.
Don't go on a career hunt. Consistency in your career history is a good thing to lenders. Finding a new job (especially one with a better salary) may not hinder your ability to qualify for a mortgage. However, if you switch careers before your loan is approved, your loan process could fail or be stalled.
Don't take your accounts to a new bank or move around your finances. As your lending institution considers your loan application, you will likely be asked to produce bank statements for recent months for your checking and savings accounts, money market accounts and other liquid wealth. The lender looks for a consistent flow of your funds each month, in order to rule out fraud. Even for innocent reasons, transferring funds or switching banks could make it harder for your lending institution to verify your bank history.
Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. Your good faith deposit does not belong to the seller: it remains yours until closing. A FSBO seller might not know that the good faith funds is to be applied to your expenses upon closing. A neutral party, like an attorney can hold onto your earnest money, or you may put it temporarily into a trust account until you close. The contract should specify who gets the earnest funds if the transaction does not go through.
Metro Mortgage can walk you through the pitfalls of getting a mortgage. Call us: 866-300-1550.