What to Avoid During your Home Purchase
What's better than buying a bunch of new furniture to adorn your future home? Nothing. But making large purchases before closing can be a mistake. Until the house is really yours, there are still some hoops to jump through. Below you'll find a list of things to stay away from during this crucial time of your home purchase.
Don't throw your money around. You may be itching to turn your new living room into a showplace, or celebrate your new dream home, but stay away from big purchases like furniture, jewelry, appliances, or vacations until closing. Financing your stainless steel appliances with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. Using cash to buy expensive items can also create a problem: most lenders look at your cash on hand when approving your mortgage.
Don't look for a new career. Stability in your career history is a positive thing to banks and other lenders. Getting a new job may not affect your ability to qualify for a mortgage loan - especially if you are improving your salary. But in some cases, changing careers during the mortgage application process might bring concern and hinder your application.
Don't move finances around or switch banks. As the lender reviews your mortgage loan application, you will likely be instructed to provide bank statements for the last two or three months for your checking accounts, savings accounts, money market accounts and other liquid finances. To detect potential fraud, most loans need thorough paperwork to document the source of all funds. Switching banks or transferring finances to another account - for whatever reason - may hinder the documentation of your accounts.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. Your good faith money does not belong to the seller: it remains yours until the sale closes. Although your seller might not know this, any good faith funds should be used for the buyer's closing expenses. We recommend that you put the funds into a trust account, or get a neutral person, like a lawyer to hold them until the closing of the sale. Should your home purchase fail, the contract with the seller should specify where this earnest money should go.
At America's Money Source, we answer questions about this process every day. Give us a call: 4078987559.