What to Avoid During a Home Purchase
What's better than buying a bunch of new stuff to go in your future home? Nothing. But buying big ticket items before closing can be an error. Until closing, there are still some hurdles to jump. Here are some actions to refrain from before closing to be sure your transaction goes smoothly.
Don't throw your money around. You may be itching to order that new Turkish rug for the soon-to-be-yours den, but it's advisable to stay away from making large purchases like furniture, appliances, electronic equipment, or vacations until your home loan closes. Your credit numbers could change suddenly if you purchase new furniture using plastic. It's also a mistake to make those large purchases with cash. Lenders are looking at your cash reserve when considering your loan.
Don't go on a career search. Lenders look for a consistent work history on your application. Getting a new career before you start the application process for a loan may not affect your approval at all. However, if you switch careers before approval, your mortgage process could fail or be bogged down.
Don't change banks or move finances around in your bank accounts. Most lenders will require you to submit recent bank statements on your accounts: checking, savings, money market, and other assets. Your lending institution will need to see a consistent flow of your money over the month, in order to avoid fraud. No matter the purpose, changing banks or moving funds from one account to another may raise a red flag with your lender and impede your qualification process.
Don't give cash directly to your seller (generally in the case of of "for sale by owner") for earnest money. Your good faith deposit does not belong to the seller: it is actually yours until the transaction is final. Your good faith money is to be used for your expenses upon closing; some individual sellers might not know this. It's wise to put the funds into a trust account, or get an attorney to hold them until closing. The final disposition of earnest money, in the case of a failed transaction, should be written in the contract with your seller.
At PrimeMax Mortgage Group, NMLS#195523, we answer questions about this process every day. Give us a call: (256) 543-9211.