What to Avoid During a Home Purchase
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 house is realy yours. We have given you a list of things below we suggest you stay away from when waiting for closing.
Don't empty your wallet on big-ticket items You may be tempted to buy that new easy-chair for the soon-to-be-yours parlor, but it's advisable to avoid making large buys like furniture, appliances, jewelry, or vacations until closing. Using credit cards to buy new living room furniture could compromise your lending process by changing your numbers dramatically. It's even a mistake to make those large purchases using cash. Lenders are looking at your available cash when considering your loan.
Don't go on a job search. Your recent career history should show stability. 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, if you switch careers before you qualify, your loan process could fail or be slowed down.
Don't switch banks or move finances around in your bank accounts. While the lender reviews your mortgage loan package, you will likely be instructed to produce bank statements for the last few months on your checking and savings accounts, money market funds and other liquid wealth. To detect potential fraud, most lending institutions want detailed paperwork to determine the source of all incoming funds. Even for practical reasons, moving around money or switching banks could make it difficult for your lender to document your bank history.
Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. Your good faith money does not belong to the seller: it is actually yours until closing. Your earnest funds are to be applied to your expenses upon closing; a individual seller might not know this. A neutral party, like an attorney can hold your deposit, or you may put it temporarily into a trust account until closing. If your transaction fails, your purchase agreement should dictate to whom your earnest money should go.
Alerus Mortgage can walk you through the pitfalls of getting a mortgage. Call us at 952 417 8481.