What to Avoid During a 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. Until closing, there are still some hoops to jump through. We have given you a list of actions below we suggest you avoid when waiting for closing.
Don't throw your money around. Although you may be dreaming of ways to turn your new house into a castle, avoid major purchases like appliances, electronics, or expensive furnishings. You will also want to avoid vacations and car purchases until the closing of your loan. Your lender may send up red flags if you finance your furniture on your credit cards during your loan process. It's also a mistake to make those big-ticket purchases using cash. Lenders are looking at your available cash when considering your loan.
Don't look for a new career. Your recent work history should show stability. Getting a new job before you apply for a loan may not jeopardize your approval at all. However, switching careers during the approval process may affect your approval.
Don't take your accounts to a new bank or move around your money. Bank statements from the last two or three months for accounts in your name (checking, savings, money market, and other assets) will probably be reviewed as the lending institution makes decisions regarding your mortgage application. To detect potential fraud, most lenders require a thorough paper trail to document the source of all incoming funds. No matter the purpose, changing banks or transferring funds might raise a red flag with your lender and impede your loan process.
Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until the completion of the deal, the good faith deposit remains yours. Your earnest money is to go toward your expenses closing; some sellers might not realize this. We recommend that you put the money into a trust account, or get a neutral party, like an attorney, to hold it until the closing of the sale. Should your home purchase fail, the purchase agreement should document to whom your good faith funds should go.
At AFI Mortgage Company, we answer questions about this process every day. Call us at (337) 494-5626.