What to Avoid During your Home Purchase
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, many homebuyers make the mistake of taking their enthusiasm straight to the mall or appliance store. Until closing, there are still some hurdles to jump. Below you'll find a list of actions to stay away from during this crucial time of your home purchase.
Don't buy luxury items. It may be tempting to buy that new sofa for the soon-to-be-yours parlor, but it's best to stay away from making major buys like furniture, appliances, electronic equipment, or cars until your home loan closes. Financing new Plasma TVs with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. It's even a bad idea to make those large purchases using cash. Lending Institutions are looking at your cash on hand when considering your loan.
Don't get a new career. Your recent work history should show stability. Finding a new job (especially one with a bump in salary) may not jeopardize your ability to qualify for your loan. However, if you switch careers before you qualify, your process could fail or be stalled.
Don't switch your accounts to a new bank or move around your finances. Bank statements from the last few months for accounts in your name (savings, checking, money market, and other assets) will be reviewed as the lending institution considers your loan application. In order to eliminate fraud, lenders look for a clear and consistent picture of how you earn your money and where any additional funds come from. No matter the purpose, switching banks or moving funds from one account to another could raise a red flag with the lender and slow your loan process.
Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. Until closing, any good faith deposit remains yours. Although your FSBO seller might not understand this, your earnest money must be applied to the buyer's closing expenses. We recommend that you put the deposit into a trust account, or get an attorney to hold it until the deal closes. Should your home purchase fail, your contract with the seller should dictate to whom this good faith funds should go.
Saab Mortgage can answer questions about these "Don'ts" and many others. Give us a call: 703-288-0777.
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