What to Avoid During a Home Purchase
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of carrying their enthusiasm straight to the mall or furniture store. There are still a few major hurdles to jump before the house is realy yours. Here are some actions to avoid before closing to assure the transaction goes smoothly.
Don't overspend on big-ticket items You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new castle, but stay away from big purchases like furniture, cars, appliances, or vacations until closing. Using credit cards to buy furniture could compromise your lending process by altering your numbers dramatically. It's also a mistake to make those big-ticket purchases using cash. Lenders are examining your cash reserve when considering your loan.
Don't look for a new job. Consistency in your career history is a good thing to lending institutions. Finding a new job (particularly one with a bigger paycheck) may not hinder your ability to qualify for a loan. However, if you switch careers before your loan is approved, your mortgage process could fail or be slowed down.
Don't switch banks or move finances around in your accounts. Most lenders will require you to submit recent bank statements on your accounts: checking, savings, money market, and other assets. In order to detect fraud, lenders require clear documentation of how you earn your money and where additional funds come from. No matter the reason, changing banks or transferring money might raise a red flag with your lender and slow your loan process.
Don't hand over a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Until the sale is complete, any good faith deposit actually belongs to you. Although your FSBO seller may not know this, the earnest money should be used for the buyer's closing expenses. We recommend that you put the money into a trust account, or get an attorney to hold it until closing. The contract should dictate who gets the earnest funds if the transaction does not go through.
At Hawk Mortgage Group, we answer questions about this process every day. Call us at (443) 619-7900.