What to Avoid During your Home Purchase
What's better than buying a bunch of new furniture to go in your future home? Not much. But buying big ticket items before closing can be harmful. There still remain a few major hurdles to jump before the house is realy yours. We have listed some actions below we suggest you avoid when waiting for your loan to close.
Don't throw your money around. You may be itching to order that new couch for the soon-to-be-yours den, but it's best to avoid making major purchases like furniture, appliances, jewelry, or vacations until closing. Using credit cards to buy furniture could compromise your loan process by distorting your numbers. Since lenders are reviewing your financial accounts, a large cash purchase is also a mistake.
Don't go on a career search. Lending Institutions like to see a consistent work history on your application. Getting a new job may not jeopardize your ability to qualify for a loan - especially if you are getting a better salary. However, if you switch careers before you qualify, your mortgage process could fail or be stalled.
Don't switch your accounts to a new bank or move around your cash. Most lenders will require you to provide recent bank statements on accounts in your name: checking, savings, money market, and other assets. To avoid fraud, lenders look for a consistent portrayal of how you earn your living and where any additional money comes from. No matter the reason, switching banks or transferring funds can raise a red flag with the lender and slow down your approval process.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, made out directly to him. Your good faith deposit does not belong to the seller: it is actually yours until the sale closes. The good faith money is to go toward your expenses closing; your FSBO seller may not realize this. Find an attorney or other neutral party who is able to hang on to the money or put it in a trust account until closing. Your purchase agreement should specify to whom the funds go if the transaction does not go through.
At America's Money Source, we answer questions about this process every day. Call us: 4078987559.