What to Avoid During a Home Purchase
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Lots of new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller says "yes" and the loan is approved. Until your keys are in hand, there still remain some hoops to jump through. We have listed some actions below you will want to stay away from when waiting for your loan to close.
Don't overspend on big-ticket items You may be itching to order that new sofa for the soon-to-be-yours living room, but it's best to avoid making major purchases like furniture, appliances, jewelry, or cars until your home loan closes. Financing your Plasma TVs with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. Because lending institutions are perusing your bank accounts, a large cash purchase is also a mistake.
Don't get a new career. Lenders look for a consistent work history on your application. Getting a new job may not affect your ability to qualify for a mortgage loan - especially if you are going to be making more money. However, switching jobs in the middle of the application process may influence your approval.
Don't move money around or change banks. Bank statements from the last few months for accounts in your name (checking, savings, money market, and others) will likely be studied as the lender considers your mortgage application. In order to avoid fraud, lenders look for clear documentation of how you earn your living and where additional money comes from. No matter the reason, changing banks or transferring funds might raise a red flag with your lender and impede your loan process.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. As a rule, your good faith money is yours, not the seller's up until the sale is final. Any earnest money is to go toward your expenses upon closing; some sellers might not understand this. We recommend that you put the deposit into a trust account, or get a neutral party, like an attorney, to hold it until closing. If your transaction fails, the purchase contract should specify to whom this earnest money should go.
West Community Credit Union can answer questions about these "Don'ts" and many others. Call us: 636-720-2432.