What to Avoid During your Home Purchase
With the thrill that comes with an accepted offer and a "yes" from the lender, some homebuyers make the error of carrying their enthusiasm straight to the mall or furniture store. It's best to remember that until your keys are in hand, your lender is watching your accounts very closely. Below you'll find a list of actions to stay away from during this crucial time of your home purchase.
Don't throw your money around. Although you may be planning ways to turn your new home into a castle, try to stay away from major purchases like appliances, electronics, or expensive furnishings. You will also want to keep away from vacations and vehicle purchases until your loan closes. Your credit numbers could be altered suddenly if you purchase new furniture using plastic. Using cash to purchase expensive items can also be a mistake: most banks take into consideration your cash reserve when approving your loan.
Don't look for a new job. Your recent career history should show stability. Changing jobs may not jeopardize your ability to qualify for a mortgage loan - especially if you are improving your salary. However, if you switch careers before approval, your process could fail or be stalled.
Don't change banks or move cash around in your bank accounts. As your lender reviews your loan package, you will likely be instructed to provide bank statements for the last two or three months for your checking and savings accounts, money market funds and other liquid finances. In order to eliminate fraud, lenders want to see a clear and consistent picture of how you earn your living and where additional funds come from. Even for innocent reasons, transferring cash or switching banks might make it difficult for your lending institution to confirm your account history.
Don't give cash directly to your seller (generally in the case of of "for sale by owner") to be used as a "good faith" deposit. As a rule, your good faith money is yours, not the seller's until closing. Your good faith money is to be used for your expenses upon closing; the individual seller may not realize this. We recommend that you put the funds into a trust account, or get a neutral party, like an attorney to hold them until the closing of the sale. Should your sale fall through, your contract with the seller should specify where the good faith deposit should go.
Hawk Mortgage Group can answer questions about these "Don'ts" and many others. Call us: (443) 619-7900.