Things to Avoid While Purchasing a Home
What's better than buying a bunch of new furnishings to go in your future home? Not much. But buying big ticket items before your loan closes can be a misstep. Until the keys are handed over, there still remain some hoops to jump through. We have listed some actions below you will want to avoid when waiting for your loan to close.
Don't buy big-ticket items. You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new dream home, but stay away from big purchases like furniture, jewelry, appliances, or vacations until closing. Using plastic to buy new living room furniture could jeopardize your loan process by distorting your numbers. Using cash to purchase expensive items can also be a mistake: most lending institutions consider your cash on hand when approving your mortgage.
Don't look for a new job. Lending Institutions look for a consistent job history on your paperwork. Getting a new job before you apply for a mortgage loan may not compromise your approval at all. However, if you switch careers before your loan is approved, your process could fail or be bogged down.
Don't move finances 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 studied as the lender considers your application. Your lender needs to see a steady flow of your funds each pay period, in the interest of avoiding fraud. No matter the purpose, switching banks or moving money from one account to another might raise a red flag with your lender and slow your loan process.
Don't give 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 is actually yours until the transaction is final. Although your FSBO seller might not realize this, any good faith money must be used for the buyer's closing expenses. You'll need to put the deposit into a trust account, or get an attorney to hold it until closing. If your home purchase fails, the purchase contract should dictate to whom your earnest money should go.
America's Money Source can answer questions about these "Don'ts" and many others. Call us: 4078987559.