Things to Avoid While Buying a Home
With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the mistake of carrying their enthusiasm straight to the mall or furniture store. Until your keys are in hand, there are still some hoops to jump through. Here are some actions to avoid before closing to assure the transaction goes well.
Don't throw your money around. You may be itching to order that new easy-chair for the soon-to-be-yours parlor, but it's best to avoid making big ticket buys like furniture, appliances, electronic equipment, or cars until your home loan closes. You may send up red flags with your lender if you finance new electronics on your credit cards in the middle of your loan process. Because lending institutions are perusing your financial accounts, a large cash purchase is also a bad idea.
Don't look for a new job. Lenders like to see a consistent career history on your application. Finding a new career (particularly one with a bump in salary) may not change your ability to qualify for your loan. But for some, switching jobs during the mortgage approval process may raise concern and affect your approval.
Don't move cash around or change banks. Bank statements from recent months for your accounts (savings, checking, money market, and other accounts) will probably be analyzed as the lending institution considers your loan application. To detect potential fraud, most lending institutions need thorough paperwork to document the source of all incoming funds. Even for practical purposes, transferring funds or changing banks may make it harder for your lending institution to document your bank history.
Don't give cash directly to your seller (generally in cases of "for sale by owner") for a "good faith" deposit. Your earnest money does not belong to the seller: it is actually yours until the sale closes. A FSBO seller may not know that any good faith funds must be applied to your expenses at closing. Get an attorney or other neutral person who is able to hang on to the money or place it in a trust account until you close. The disposition of earnest money, if your home purchase falls through, should be specified in the purchase agreement with the seller.
At Alerus Mortgage, we answer questions about this process every day. Give us a call: 952 417 8481.