What to Avoid During a Home Purchase
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Many new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller accepts their offer and the loan is approved. Until your loan closes, there still remain some hoops to jump through. We have given you a list of actions below we suggest you stay away from when waiting for your loan to close.
Don't empty your wallet on big-ticket items You may be itching to turn your new living room into a home magazine cover, or celebrate your new dream home, but stay away from major purchases like furniture, electronics, appliances, or vacations until your loan closes. Your credit numbers could change suddenly if you purchase new furniture using plastic. Since lending institutions are examining your bank accounts, a large cash purchase is also a mistake.
Don't look for a new job Your recent work history should show stability. Finding a new career (especially one with a better paycheck) may not change your ability to qualify for a mortgage loan. However, getting a new career during your approval process might influence your approval.
Don't move cash around or change banks. Your lending institution will instruct the submission of recent bank statements for all of your accounts: checking, savings, money market, and other assets. The lending institution is looking for a consistent rise and fall of your money over the pay period, in the interest of ruling out fraud. Switching banks or moving money to another account - even if its only to consolidate funds - might hinder the documentation of your funds.
Don't give funds directly to your seller (generally in cases of "for sale by owner") for earnest money. As a rule, your good faith deposit belongs to you, not to the seller until the sale is final. A FSBO seller might not know that any good faith funds should go toward your expenses at closing. Find a lawyer or other neutral party who can hang on to the deposit or put it in a trust account until closing. The disposition of good faith funds, in the case of a failed transaction, should be specified in the purchase agreement with your seller.
At First American Financial, we answer questions about this process every day. Call us at 770-270-9044.