Things to Avoid While Purchasing a Home
Many new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller accepts their offer and the loan is approved. It's best to remember that until your keys are in hand, your lender is watching you very closely. Below you'll find a list of actions to avoid during this crucial time of your home purchase.
Don't buy luxury items. You may be tempted to buy that new easy-chair for the soon-to-be-yours living room, but it's best to avoid making major buys like furniture, appliances, electronic equipment, or cars until your home loan closes. Using plastic to buy furniture could compromise your lending process by distorting your numbers. Because lending institutions are examining your bank accounts, a large cash purchase is also not advised.
Don't go on a job search. Stability in your work history is a good thing to banks and other lenders. Finding a new job (particularly one with a bigger salary) may not affect your ability to qualify for your loan. However, finding a new career in the middle of your application process may affect whether or not you are approved.
Don't move money around or switch banks. Your lender will instruct the submission of recent bank statements for your accounts: checking, savings, money market, and other assets. To detect potential fraud, most loans want a thorough paper trail to determine the source of all funds. Even for innocent reasons, moving around money or switching banks may make it harder for your lender to verify your bank history.
Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your earnest money is yours, not the seller's until the deal closes. Any good faith funds are to go toward your expenses closing; your FSBO seller might not understand this. It's best to put the deposit into a trust account, or get a neutral party, like a lawyer, to hold it until the deal closes. The disposition of earnest funds, if your sale falls through, should be indicated in the purchase agreement with the seller.
At Hawk Mortgage Group, we answer questions about this process every day. Give us a call at (443) 619-7900.