What to Avoid During your Home Purchase
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In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of taking their enthusiasm straight to the mall or furniture store. There are still a few major hurdles to jump before the keys are handed over. Below you'll find a list of things to stay away from during this critical time of your home purchase.
Don't make expensive purchases. You may be itching to turn your new kitchen into a showplace, or celebrate your new castle, but stay away from big purchases like furniture, cars, appliances, or vacations until closing. Your credit numbers could be altered suddenly if you purchase new furniture using plastic. It's even a red flag to make those large purchases with cash. Lending Institutions are examining your cash reserve when considering your loan.
Don't look for a new career. Your recent work history should show stability. Getting a new career before you apply for a mortgage may not affect your approval at all. However, if you switch careers before you qualify, your loan process could fail or be stalled.
Don't switch your accounts to a new bank or move around your cash. As the lender reviews your mortgage application, you will probably be instructed to provide bank statements for the last two or three months for your checking and savings accounts, money market funds and other liquid wealth. In order to eliminate fraud, lenders want to see a clear and consistent picture of how you earn your living and where any additional funds come from. No matter the reason, changing banks or transferring money could raise a red flag with the lender and impede your approval process.
Don't give your FSBO (for sale by owner) seller earnest money, delivered to his door. Your good faith money does not belong to the seller: it remains yours until the sale closes. Some FSBO sellers might not know that the good faith funds is to go toward your expenses at closing. We recommend that you put the funds into a trust account, or get a neutral person, like a lawyer to hold them until the deal closes. The final disposition of earnest money, if your sale falls through, should be written in the contract with your seller.
Cosatal Financial Group can answer questions about these "Don'ts" and many others. Call us: (512) 292-3494.