What to Avoid During a Home Purchase
What's better than buying a bunch of new furnishings to go in your future home? Nothing. But buying big ticket items before your loan closes could be trouble. Until the house is really yours, there are still some hoops to jump through. Below you'll find a list of actions to stay away from during this crucial time of your home purchase.
Don't overspend on big-ticket items You may be tempted to buy that new easy-chair for the soon-to-be-yours living room, but it's best to stay away from making big ticket buys like furniture, appliances, jewelry, or cars until closing. Using credit cards to buy new living room furniture could jeopardize your loan process by altering your numbers dramatically. Using cash to purchase big items can even create a problem: many lenders take into consideration your cash on hand when approving your mortgage.
Don't look for a new career. Stability in your work history is a good thing to lenders. Finding a new career (especially one with a better paycheck) may not hinder your ability to qualify for your mortgage. However, switching careers in the middle of the application process may affect whether or not you are approved.
Don't change banks or move cash around in your bank accounts. Bank statements from the last few months for all of your accounts (savings, checking, money market, and other assets) will likely be reviewed as the lending institution considers your mortgage application. To eliminate potential fraud, most lenders require a detailed paper trail to determine the source of all cash. No matter the reason, moving banks or moving money from one account to another might raise a red flag with your lender and slow down your application process.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. Until closing, any good faith deposit remains yours. Your good faith funds are to be used for your expenses upon closing; your individual seller may not know this. An attorney or other type of neutral party can hang onto your earnest money, or you may put it temporarily into a trust account until closing. If your sale falls through, your purchase contract should dictate where the earnest money should go.
America's Money Source can walk you through the pitfalls of getting a mortgage. Call us: 4078987559.