What to Avoid During your Home Purchase
What's better than buying a bunch of new stuff to adorn your future home? Nothing. But making big purchases before your loan closes can be a misstep. Until the keys are handed over, there are still some hurdles to jump. Below you'll find a list of actions to stay away from during this critical time of your home purchase.
Don't throw your money around. You may be itching to turn your new kitchen into a showplace, or celebrate your new dream home, but keep away from big purchases like furniture, jewelry, appliances, or vacations until your loan closes. Financing your bedroom furniture with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. It's also a red flag to make those big purchases with cash. Lending Institutions are examining your cash on hand when considering your loan.
Don't get a new career. Lenders look for a consistent career history on your application forms. Changing jobs may not compromise your ability to qualify for a loan - particularly if you are improving your salary. But for some people, changing jobs during the mortgage loan application process may raise concern and stymie your application.
Don't move cash around or switch banks. Bank statements from the last two or three months for accounts in your name (checking, savings, money market, and other accounts) will probably be reviewed as the lending institution considers your approval. In order to avoid fraud, lenders will need a clear and consistent picture of how you earn your living and where any additional funds come from. Even for practical reasons, transferring finances or changing banks may make it difficult for your lender to verify your bank history.
Don't give funds directly to your seller (usually in the case of of "for sale by owner") to be considered a "good faith" deposit. Your good faith deposit does not belong to the seller: it is actually yours until closing. Any good faith funds are to go toward your expenses upon closing; the individual seller might not realize this. We recommend that you put the money into a trust account, or get a neutral party, like a lawyer, to hold it until the deal closes. The disposition of good faith funds, in the case of a failed transaction, should be indicated in the purchase agreement with the seller.
America's Money Source can answer questions about these "Don'ts" and many others. Call us at 4078987559.