Things to Avoid While Purchasing a Home
What's better than getting a bunch of new furnishings to go in your future home? Not much. But making large purchases before your loan closes can be an error. It's wise to remember that until you get the keys, your lender is watching you very closely. We have listed some actions below we suggest you avoid when waiting for closing.
Don't buy luxury items. You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new dream home, but keep away from big purchases like furniture, cars, appliances, or vacations until closing. Financing new Plasma TVs with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. It's also a bad idea to make those big-ticket purchases with cash. Lending Institutions are examining your cash on hand when considering your loan.
Don't go on a career search. Lending Institutions look for a consistent job history on your application forms. Getting a new job may not affect your ability to qualify for a mortgage loan - particularly if you are improving your salary. But in some cases, switching jobs during the loan approval process might bring concern and affect your approval.
Don't move cash around or change banks. Bank statements from the last two or three months for your accounts (checking, savings, money market, and other accounts) will likely be studied as the lending institution makes decisions regarding your loan application. To detect potential fraud, most loans need detailed paperwork to verify the source of all cash. Switching banks or moving money elsewhere - even if its merely to consolidate funds - could make it difficult for your lender to verify your funds.
Don't give a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Until the sale is complete, the good faith deposit remains yours. Although some FSBO sellers may not realize this, your earnest money should be used for your closing expenses. You'll want to put the money into a trust account, or get a neutral party, like an attorney, to hold it until closing. The contract should specify where the money goes if the transaction does not go through.
At America's Money Source, we answer questions about this process every day. Call us at (407) 898-7559.
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