What to Avoid During a Home Purchase
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. There are still a few major hurdles to jump before your loan closes. Below you'll find a list of actions to avoid during this critical time of your home purchase.
Don't empty your wallet on big-ticket items You may be tempted to buy that new couch for the soon-to-be-yours den, but it's best to avoid making major buys like furniture, appliances, electronic equipment, or cars until closing. Using plastic to buy furniture could compromise your loan process by distorting your numbers. Because lending institutions are perusing your bank accounts, a large cash purchase is also not advised.
Don't go on a career search. Consistency in your work history is a positive thing to banks and other lenders. Finding a new job (especially one with a bigger salary) may not change your ability to qualify for your mortgage loan. However, switching careers in the middle of your application process may influence whether or not you are approved.
Don't take your accounts to a new bank or move around your finances. Bank statements from recent months for accounts in your name (checking, savings, money market, and other accounts) will probably be studied as the lending institution makes decisions regarding your loan application. To eliminate fraud, lenders want to see a consistent portrayal of how you earn your money and where additional funds come from. Even for innocent reasons, moving around cash or switching banks might make it more difficult for your lender to document your bank history.
Don't give cash directly to your seller (commonly in cases of "for sale by owner") to be considered a "good faith" deposit. Your good faith deposit does not belong to the seller: it is actually yours until closing. Some sellers may not realize that any good faith money should go toward your expenses upon closing. An attorney or other type of neutral party can hang onto your earnest funds, or you may put them temporarily into a trust account until closing. The disposition of good faith funds, in the case of a failed transaction, should be documented in the contract with the seller.
Executive Lending Group can walk you through the pitfalls of getting a mortgage. Call us: (405) 822-1957.