Things to Avoid While Purchasing a Home
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of carrying their enthusiasm straight to the mall or furniture store. It's best to remember that until you get the keys, your lender is watching your finances very closely. Below you'll find a list of things to stay away from during this critical time of your home purchase.
Don't empty your wallet 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, jewelry, appliances, or vacations until closing. Financing your bedroom furniture 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 expensive items can even create an issue: many banks consider your available cash when approving your mortgage.
Don't look for a new job. Your recent work history should show consistency. Changing jobs may not affect your ability to qualify for a loan - particularly if you are improving your salary. However, if you switch careers before your loan is approved, your loan process could fail or be bogged down.
Don't switch your accounts to a new bank or move around your cash. As your lending institution reviews your mortgage application, you will likely be required to provide bank statements for recent months on your checking accounts, savings accounts, money market funds and other liquid assets. The lender is looking for a steady rise and fall of your money over the pay period, in order to rule out fraud. Changing banks or moving finances to another account - no matter the purpose - could make it difficult for the lender to verify your funds.
Don't deliver earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until the completion of the deal, the good faith money remains yours. Although your seller may not know this, any good faith funds should be applied to the buyer's closing expenses. An attorney or other type of neutral party can hold your earnest money, or you may put it temporarily into a trust account until you close. If your sale falls through, your purchase contract should dictate to whom this earnest money should go.
Tier One Mortgage, LLC can walk you through the pitfalls of getting a mortgage. Give us a call: (585) 282-0960.