Things to Avoid While Purchasing a Home
What's more fun than buying a bunch of new furniture to go in your future home? Not much. But buying big ticket items before your loan closes can be harmful. There are still a few major hurdles to jump before the house is realy yours. Below you'll find a list of things to avoid during this critical time of your home purchase.
Don't overspend on big-ticket items It may be tempting to order that new Turkish rug for the soon-to-be-yours living room, but it's best to stay away from making large purchases like furniture, appliances, jewelry, or vacations until closing. Your lender may send up red flags if you purchase your electronics on your credit cards during your loan process. It's even a mistake to make those huge purchases with cash. Lenders are looking at your cash reserve when considering your loan.
Don't get a new career. Your recent work history should show consistency. Getting a new job before you apply for a loan may not affect your approval at all. However, finding a new job in the middle of your approval process could affect whether or not you are approved.
Don't switch your accounts to a new bank or move around your money. Bank statements from the last two or three months for all of your accounts (checking, savings, money market, and others) will probably be reviewed as the lender considers your loan application. In order to avoid fraud, lenders require a clear and consistent picture of how you earn your living and where additional money comes from. Even for practical purposes, moving around cash or changing banks might make it difficult for your lending institution to verify your account history.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, delivered to his door. Your good faith deposit does not belong to the seller: it remains yours until the sale closes. Although some FSBO sellers might not realize this, any good faith funds should go toward your closing expenses. An attorney or other type of neutral party can hold onto your funds, or you may place them temporarily into a trust account until you close. Should your sale fall through, your contract with the seller should dictate where the earnest money should go.
At America's Money Source, we answer questions about this process every day. Give us a call at (407) 898-7559.
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