What to Avoid During a Home Purchase
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, many 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 accounts very closely. Here are some things to refrain from during the home buying process to assure the transaction goes well.
Don't throw your money around. You may be itching to order that new Turkish rug for the soon-to-be-yours living room, but it's best to stay away from making big ticket purchases like furniture, appliances, jewelry, or vacations until your home loan closes. Your credit numbers could change suddenly if you purchase new furniture using credit cards. It's also a bad idea to make those large purchases with cash. Lenders are examining your cash on hand when considering your loan.
Don't go on a job search. Lending Institutions look for a consistent job history on your paperwork. Finding a new job (particularly one with a bigger paycheck) may not hinder your ability to qualify for a mortgage loan. However, switching jobs during your loan process might influence your approval.
Don't switch your accounts to a new bank or move around your cash. Bank statements from the last two or three months for accounts in your name (savings, checking, money market, and others) will be studied as the lender considers your approval. The lender hopes to see a consistent flow of your funds over the pay period, in the interest of avoiding fraud. Even for practical purposes, moving around cash or switching banks may make it difficult for the lending institution to document your account history.
Don't deliver earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your earnest money does not belong to the seller: it is actually yours until closing. A FSBO seller may not realize that the good faith funds should be used for your expenses at closing. Find a lawyer or other neutral person who is able to hang on to the funds or put them in a trust account until you close. If your sale falls through, the purchase agreement should indicate to whom your good faith deposit should go.
Family Mortgage Company of Hawaii, Inc. NMLS #244497 can answer questions about these "Don'ts" and many others. Call us at (808) 935-0678.