What to Avoid During your Home Purchase
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of taking their enthusiasm straight to the mall or appliance store. There still remain a few major hurdles to jump before the keys are handed over. Here are some things to refrain from during the home buying process to be sure the transaction goes well.
Don't throw your money around. You may be itching to turn your new kitchen into a showplace, or celebrate your new castle, but keep away from expensive purchases like furniture, cars, appliances, or vacations until closing. Financing new stainless steel appliances with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. Using cash to purchase big items can even be a bad idea: many lenders take into consideration your available cash when approving your mortgage loan.
Don't get a new job. Your recent career history should show consistency. Finding a new career (especially one with a bump in salary) may not affect your ability to qualify for a mortgage. However, switching jobs in the middle of your loan process may influence whether or not you are approved.
Don't move money around or change banks. Bank statements from the last two or three months for accounts in your name (checking, savings, money market, and other assets) will likely be analyzed as the lending institution considers your application. In order to avoid fraud, lenders will need clear documentation of how you earn your living and where any additional funds come from. Even for practical reasons, moving around funds or switching banks could make it harder for your lending institution to confirm your bank history.
Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your good faith money does not belong to the seller: it remains yours until the sale closes. The good faith money is to go toward your expenses upon closing; some FSBO sellers may not understand this. Find a lawyer or other neutral person who is able to hang on to the funds or put them in a trust account until you close. If your transaction fails, your purchase contract should specify to whom this earnest money should go.
At Signature Mortgage of Indiana, we answer questions about this process every day. Call us: 812-945-4400.