Things to Avoid While Purchasing a New Home
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of taking their enthusiasm straight to the mall or furniture store. There still remain a few major hurdles to jump before the keys are handed over. Here are some actions to avoid during the home buying process to be sure the transaction goes smoothly.
Don't buy big-ticket items. It may be tempting to buy that new couch for the soon-to-be-yours living room, but it's best to stay away from making major purchases like furniture, appliances, jewelry, or cars until your home loan closes. You may send up red flags with your lender if you finance new appliances on your credit cards in the middle of your loan process. It's even a mistake to make those large purchases using cash. Lenders are looking at your cash reserve when considering your loan.
Don't go on a job search. Lending Institutions look for a consistent job history on your paperwork. Finding a new career (particularly one with a better salary) may not hinder your ability to qualify for your mortgage loan. However, if you switch careers before approval, your process could fail or be bogged down.
Don't move cash around or switch banks. Bank statements from recent months for your accounts (savings, checking, money market, and other accounts) will be reviewed as the lender considers your approval. The lender needs to see a steady flow of your funds over the month, in order to avoid fraud. Even for innocent purposes, moving around funds or changing banks may make it difficult for the lending institution to confirm your bank history.
Don't give money directly to your seller (generally in cases of "for sale by owner") to be considered a "good faith" deposit. Your good faith money does not belong to the seller: it is actually yours until the transaction is final. Any earnest funds are to be used for your expenses closing; some individual sellers may not know this. Get a lawyer or other neutral party who can hold the funds or put them in a trust account until closing. Should your home purchase fail, the purchase contract should document where this good faith funds should go.
At My FL Home Loans, Inc., we answer questions about this process every day. Call us at (727) 743-1620.