Things to Avoid While Purchasing a Home
What's more fun than getting a bunch of new furnishings to adorn your future home? Nothing. But making large purchases before your loan closes can be a misstep. There are still a few major hurdles to jump before the keys are handed over. We have listed some things below we suggest you avoid when waiting for your loan to close.
Don't empty your wallet on big-ticket items Although you may be listing ways to turn your new home into a showplace, avoid big ticket purchases like appliances, electronics, or furniture. We also recommend that you stay away from vacations and vehicle purchases until the closing of your loan. Your credit numbers could change suddenly if you purchase new furniture using credit cards. Using cash to purchase big items can even create a problem: most lending institutions take into consideration your cash reserve when approving your mortgage loan.
Don't look for a new job. Stability in your career history is a positive thing to lenders. Getting a new job may not compromise your ability to qualify for a loan - particularly if you are improving your salary. However, switching careers in the middle of your application process might influence whether or not you are approved.
Don't move finances around or change banks. Bank statements from the last two or three months for accounts in your name (savings, checking, money market, and other assets) will be reviewed as the lender considers your application. The lending institution looks for a consistent flow of your money each month, in the interest of avoiding fraud. Even for practical purposes, moving around cash or changing banks might make it more difficult for your lender to confirm your bank history.
Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your good faith deposit does not belong to the seller: it remains yours until the transaction is final. The earnest funds are to be applied to your expenses closing; some individual sellers may not understand this. A neutral party, like an attorney can hold your earnest funds, or you may place them temporarily into a trust account until you close. The purchase contract should dictate who gets the deposit if the transaction falls through.
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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