What to Avoid During your Home Purchase
Many new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller says "yes" and the lender approves their loan. It's wise to remember that until your keys are in hand, your lender is watching your accounts very closely. We have given you a list of actions below we suggest you stay away from when waiting for your loan to close.
Don't buy big-ticket items. It may be tempting to order that new easy-chair for the soon-to-be-yours den, but it's advisable to stay away from making big ticket buys like furniture, appliances, jewelry, or cars until closing. Your lender may send up red flags if you purchase your electronics on your credit cards in the middle of your loan process. Using cash to purchase big items can also be an issue: many banks look at your available cash when approving your application.
Don't look for a new job. Your recent job history should show stability. Changing jobs may not jeopardize your ability to qualify for a loan - especially if you are getting a bigger paycheck. However, switching careers in the middle of the approval process may influence whether or not you are approved.
Don't take your accounts to a new bank or move around your money. While your lending institution considers your mortgage application, you will probably be instructed to produce bank statements for recent months for your checking accounts, savings accounts, money market funds and other liquid finances. To eliminate potential fraud, most lending institutions need a detailed paper trail to determine the source of all funds. No matter the reason, moving banks or moving funds from one account to another can raise a red flag with your lender and slow down your qualification process.
Don't give cash directly to your seller (generally in cases of "for sale by owner") for earnest money. As a rule, your good faith money is yours, not the seller's up until closing. Although some FSBO sellers might not realize this, the earnest money should be used for the buyer's closing expenses. An attorney or other type of neutral party can hold onto your earnest funds, or you may place them temporarily into a trust account until you close. Should your sale fall through, your purchase agreement should dictate to whom the earnest money should go.
Prime Capital Mortgage Corp can answer questions about these "Don'ts" and many others. Give us a call: 248-644-1200.
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