Things to Avoid While Purchasing a Home
What's better than buying a bunch of new stuff to go in your future home? Not much. But making big ticket purchases before your loan closes can be a mistake. Until the house is really yours, there are still some hurdles to jump. Here are some actions to refrain from before closing to assure the transaction goes smoothly.
Don't throw your money around. Although you will be dreaming of ways to turn your new home into a castle, avoid big ticket purchases like appliances, electronics, or expensive furnishings. You will also want to keep away from vacations and vehicle purchases until the closing of your loan. Your lender may send up red flags if you buy new electronics on your credit cards in the middle of your loan process. It's also a bad idea to make those big-ticket purchases with cash. Lending Institutions are examining your available cash when considering your loan.
Don't look for a new job. Lending Institutions feel comfortable seeing a consistent work history on your application forms. Getting a new job may not jeopardize your ability to qualify for a mortgage loan - especially if you are improving your salary. But for some people, changing careers during the mortgage approval process could bring concern and hinder your application.
Don't change banks or move money around in your accounts. Bank statements from recent months for accounts in your name (savings, checking, money market, and other accounts) will likely be studied as the lender makes decisions regarding your application. To avoid potential fraud, most lenders require a thorough paper trail to document the source of all funds. Even for innocent reasons, transferring finances or changing banks might make it harder for your lender to verify your account history.
Don't give cash directly to your seller (usually in cases of "for sale by owner") for a "good faith" deposit. Your earnest money does not belong to the seller: it remains yours until the sale closes. Although your FSBO seller may not realize this, your earnest money must be applied to the buyer's closing expenses. An attorney or other type of neutral party can hold onto your earnest funds, or you may place them temporarily into a trust account until you close. Your contract should dictate who gets the money if the transaction fails.
At REDDISH BULL FINANCE, INC. | NMLS #1247892, we answer questions about this process every day. Call us: 561-475-2281.