What to Avoid During a Home Purchase
Some new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller says "yes" and the loan is approved. Until closing, there still remain some hurdles to jump. Below you'll find a list of actions to stay away from during this critical time of your home purchase.
Don't empty your wallet on big-ticket items Although you will be planning ways to turn your new home into a showplace, try to stay away from big ticket purchases like appliances, electronics, or furniture. We also recommend that you stay away from vacations and car purchases until your loan closes. Financing your furniture with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. It's also a red flag to make those huge purchases with cash. Lenders are examining your available cash when considering your loan.
Don't go on a job search. Lending Institutions feel comfortable seeing a consistent work history on your application. Getting a new job before you start the application process for a mortgage may not jeopardize your approval at all. But for some people, getting a new job during the mortgage approval process may raise concern and stymie your approval.
Don't switch your accounts to a new bank or move around your finances. Bank statements from the last two or three months for all of your accounts (savings, checking, money market, and other accounts) will likely be studied as the lending institution makes decisions regarding your application. To eliminate fraud, lenders require clear documentation of how you earn your living and where any additional funds come from. No matter the purpose, changing banks or moving money from one account to another may raise a red flag with the lender and slow down your application process.
Don't give cash directly to your seller (generally in the case of of "for sale by owner") for a "good faith" deposit. Until the completion of the deal, any good faith money remains yours. The FSBO seller may not know that your good faith money must go toward your expenses at closing. Find a lawyer or other neutral person who will hang on to the funds or put them in a trust account until you close. If your transaction fails, your contract with the seller should specify where your earnest money should go.
Family Mortgage Company of Hawaii, Inc. NMLS #244497 can walk you through the pitfalls of getting a mortgage. Call us at (808) 935-0678.