What to Avoid During a 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 error of carrying their enthusiasm straight to the mall or furniture store. Keep in mind that until your keys are in hand, your lender is watching your finances very closely. Here are some things to avoid before closing to assure your transaction goes well.
Don't buy luxury items. You may be tempted to order that new easy-chair for the soon-to-be-yours den, but it's advisable to stay away from making big ticket purchases like furniture, appliances, jewelry, or cars until closing. Your credit numbers could be altered suddenly if you make a huge purchase using credit cards. Since lending institutions are looking closely at your bank accounts, a large cash purchase is also a bad idea.
Don't go job hunting. Lending Institutions feel comfortable seeing a consistent career history on your application. Getting a new career before you apply for a mortgage may not jeopardize your approval at all. However, if you switch careers before you qualify, your loan process could fail or be slowed down.
Don't take your accounts to a new bank or move around your money. Most lenders will require you to produce recent bank statements of your accounts: checking, savings, money market, and other liquid assets. To avoid potential fraud, most lending institutions want a thorough paper trail to verify the source of all incoming funds. No matter the reason, moving banks or transferring funds might raise a red flag with the lender and slow your application process.
Don't give cash directly to your seller (commonly in cases of "for sale by owner") for earnest money. As a rule, your earnest money belongs to you, not the seller up until the deal closes. Your seller might not realize that the good faith funds should go toward your expenses at closing. Get an attorney or other neutral party who is able to hang on to the money or put it in a trust account until closing. The contract should specify who keeps the money if the transaction fails.
At Lending Arizona, we answer questions about this process every day. Call us: 5208867283.