What to Avoid During your Home Purchase
Some new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller says "yes" and the lender approves their loan. It's best to remember that until your keys are in hand, your lender is watching your accounts very closely. We have listed some things below we suggest you avoid when waiting for your loan to close.
Don't overspend on big-ticket items You may be tempted to buy that new easy-chair for the soon-to-be-yours living room, but it's best to stay away from making large purchases like furniture, appliances, electronic equipment, or vacations until closing. Financing your furniture with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. Because lending institutions are reviewing your bank accounts, a large cash purchase is also a mistake.
Don't look for a new job. Consistency in your job history is a positive thing to banks and other lenders. Changing jobs may not compromise your ability to qualify for a loan - especially if you are getting a better salary. But for some people, changing careers during the loan application process may bring concern and hinder your application.
Don't change banks or move money around in your accounts. As your lending institution considers your loan package, you will probably be instructed to submit bank statements for the last two or three months for your checking and savings accounts, money market accounts and other liquid finances. To detect fraud, lenders need a clear and consistent picture of how you earn your money and where additional funds come from. Switching banks or moving money to another account - no matter the reason - might make it harder for your lender to document your funds.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, made out directly to him. As a rule, your good faith deposit belongs to you, not to the seller until the deal closes. Any earnest funds are to go toward your expenses upon closing; some FSBO sellers 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 closing. The final disposition of earnest money, in the case of a failed transaction, should be written in the contract with the seller.
Mason Mortgage Advisors can walk you through the pitfalls of getting a mortgage. Give us a call at 314-395-8300.
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