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 taking their enthusiasm straight to the mall or furniture store. It's wise to remember that until your keys are in hand, your lender is watching your finances very closely. Here are some actions to refrain from during the home buying process to assure your transaction goes well.
Don't overspend on big-ticket items You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new castle, but stay away from big purchases like furniture, cars, appliances, or vacations until closing. Financing new furniture with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. It's even a mistake to make those large purchases with cash. Lenders are examining your available cash when considering your loan.
Don't look for a new career. Stability in your job history is a good thing to banks and other lenders. Getting a new job before you start the application process for a mortgage may not jeopardize your approval at all. However, switching jobs in the middle of the loan process may affect your approval.
Don't switch banks or move finances around in your accounts. Bank statements from the last two or three months for all of your accounts (savings, checking, money market, and others) will be analyzed as the lending institution considers your loan application. To avoid potential fraud, most loans need detailed paperwork to determine the source of all incoming funds. Even for innocent reasons, transferring cash or switching banks may make it harder for your lending institution to confirm your account history.
Don't give cash directly to your seller (generally in the case of of "for sale by owner") to be considered earnest money. Until the completion of the deal, the good faith deposit remains yours. Although some FSBO sellers might not understand this, your good faith money must be applied to your closing expenses. A neutral party, like an attorney can hold onto your earnest money, or you may put it temporarily into a trust account until you close. The final disposition of earnest money, if your sale falls through, should be specified in the purchase agreement with the seller.
North American Financial nmls#180736 can answer questions about these "Don'ts" and many others. Call us: (702) 524-1376.
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