Things to Avoid While Purchasing a Home
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of carrying their enthusiasm straight to the mall or furniture store. Until closing, there are still some hoops to jump through. Below you'll find a list of actions to avoid during this critical time of your home purchase.
Don't empty your wallet on big-ticket items You may be itching to turn your new living room into a showplace, or celebrate your new dream home, but keep away from expensive purchases like furniture, jewelry, appliances, or vacations until the loan closes. Your credit numbers could be altered suddenly if you purchase new furniture using credit cards. Since lenders are reviewing your financial accounts, a large cash purchase is also not advised.
Don't go on a job search. Consistency in your job history is a positive thing to lending institutions. Getting a new job before you start the application process for a mortgage loan may not get in the way of your approval at all. However, getting a new job during the application process might affect whether or not you are approved.
Don't switch your accounts to a new bank or move around your money. Your lending institution will instruct the submission of recent bank statements for all of your accounts: checking, savings, money market, and other liquid assets. To avoid potential fraud, most lenders require a thorough paper trail to verify the source of all cash. No matter the reason, changing banks or transferring money might raise a red flag with the lender and slow down your approval process.
Don't deliver earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith deposit belongs to you, not the seller up until the sale is final. Although your seller may not understand this, your good faith funds should go toward the buyer's closing expenses. You'll need to put the funds into a trust account, or get an attorney to hold them until closing. If your home purchase fails, your contract with the seller should dictate where your earnest money should go.
Alerus Mortgage can walk you through the pitfalls of getting a mortgage. Call us: 952 417 8481.