What to Avoid During your Home Purchase
With the thrill 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 furniture store. It's best to remember that until you get the keys, your lender is watching your finances very closely. We have given you a list of actions below you will want to stay away from when waiting for closing.
Don't throw your money around. You may be tempted to order that new couch for the soon-to-be-yours parlor, but it's best to avoid making large purchases like furniture, appliances, electronic equipment, or vacations until your home loan closes. Using credit cards to buy new living room furniture could compromise your lending process by changing your numbers dramatically. Using cash to purchase big-ticket items can even create a mistake: most lending institutions take into consideration your cash reserve when approving your mortgage.
Don't go on a career search. Your recent work history should show stability. Getting a new career before you start the application process for a loan may not compromise your approval at all. But for some, getting a new career during the loan approval process could bring concern and affect your application.
Don't take your accounts to a new bank or move around your finances. Your lending institution will ask for recent bank statements of your accounts: savings, checking, money market, and other assets. To avoid potential fraud, most loans need a detailed paper trail to determine the source of all cash. No matter the reason, switching banks or moving funds from one account to another could raise a red flag with the lender and impede your loan process.
Don't give money directly to your seller (commonly in cases of "for sale by owner") to be considered a "good faith" deposit. As a rule, your good faith money is yours, not the seller's until the deal closes. Although your seller may not know this, any good faith funds should be used for the buyer's closing expenses. An attorney or other type of neutral party can hang onto your funds, or you may place them temporarily into a trust account until you close. The contract should document who gets the earnest funds if the transaction falls through.
At New Millennium Mortgage Co. NMLS: 331173, we answer questions about this process every day. Call us: (941) 366-5800.
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