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. Until the house is really yours, there are still some hurdles to jump. We have given you a list of things below you will want to avoid when waiting for your loan to close.
Don't empty your wallet on big-ticket items It may be tempting to order that new sofa for the soon-to-be-yours den, but it's advisable to avoid making big ticket buys like furniture, appliances, jewelry, or cars until your home loan closes. You may send up red flags with your lender if you purchase new furniture on your credit cards in the middle of your loan process. Using cash to buy big items can also create a problem: many banks take into consideration your available cash when approving your application.
Don't look for a new job. Your recent work history should show stability. Getting a new job may not compromise your ability to qualify for a loan - especially if you are improving your salary. But in some cases, changing careers during the loan approval process might raise concern and stymie your application.
Don't take your accounts to a new bank or move around your money. Bank statements from the last two or three months for accounts in your name (savings, checking, money market, and other assets) will likely be reviewed as the lending institution makes decisions regarding your loan application. Your lending institution will need to see a steady rise and fall of your money over the month, in order to avoid fraud. Switching banks or moving finances to another account - even if its only to pool funds - may make it difficult for your lender to review your funds.
Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. Your good faith deposit does not belong to the seller: it remains yours until closing. Although some FSBO sellers may not realize this, the earnest money should go toward the buyer's closing expenses. We recommend that you put the funds into a trust account, or get an attorney to hold them until the deal closes. Should your sale fall through, your purchase contract should specify where this good faith funds should go.
Alerus Mortgage can walk you through the pitfalls of getting a mortgage. Call us at 952 417 8481.