What to Avoid During a Home Purchase
What's more fun than getting a bunch of new stuff to go in your future home? Not much. But buying big ticket items before your loan closes can be an error. Until your keys are in hand, there still remain some hoops to jump through. Here are some actions to avoid before closing to be sure the transaction goes well.
Don't buy big-ticket items. Although you may be planning ways to turn your new house into a castle, try to stay away from big ticket purchases like appliances, electronics, or expensive furnishings. You will also want to avoid vacations and vehicle purchases until the closing of your loan. You may send up red flags with your lender if you purchase your furniture on your credit cards in the middle of your loan process. It's also a red flag to make those big purchases with cash. Lending Institutions are examining your available cash when considering your loan.
Don't look for a new job. Consistency in your job history is a good thing to lending institutions. Getting a new job before you start the application process for a mortgage loan may not compromise your approval at all. But for some people, changing careers during the loan application process could raise concern and affect your application.
Don't switch your accounts to a new bank or move around your money. Bank statements from the last two or three months for your accounts (savings, checking, money market, and other assets) will probably be reviewed as the lending institution considers your loan application. To avoid potential fraud, most lending institutions need thorough paperwork to document the source of all funds. Even for practical purposes, transferring cash or switching banks could make it harder for your lender to document your account history.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, made out directly to him. As a rule, your good faith deposit belongs to you, not the seller until the sale is final. The good faith money is to go toward your expenses upon closing; some sellers might not understand this. You'll want to put the money into a trust account, or get an attorney to hold it until the closing of the sale. The disposition of earnest money, if your home purchase falls through, should be specified in the contract with your seller.
At Primemax Mortgage Group, NMLS#195523, we answer questions about this process every day. Give us a call at 2565439211.