What to Avoid During a Home Purchase
What's more fun than getting a bunch of new stuff to adorn your future home? Not much. But making big ticket purchases before your loan closes could be trouble. There are still a few major hurdles to jump before the house is realy yours. We have listed some things below we suggest you stay away from when waiting for your loan to close.
Don't throw your money around. You may be itching to turn your new living room into a showplace, or celebrate your new dream home, but keep away from major purchases like furniture, cars, appliances, or vacations until your loan closes. Financing new furniture with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. Using cash to purchase expensive items can also create a bad idea: many banks look at your cash reserve when approving your mortgage loan.
Don't go on a job search. Lenders look for a consistent career history on your application forms. Getting a new career before you apply for a mortgage loan may not affect your approval at all. However, if you switch careers before your loan is approved, your loan process could fail or be stalled.
Don't switch banks or move money around in your accounts. While the lending institution considers your mortgage package, you will probably be instructed to submit bank statements for the last few months for your checking and savings accounts, money market accounts and other liquid finances. Your lender looks for a steady flow of your money over the month, in the interest of ruling out fraud. Even for innocent purposes, transferring cash or switching banks might make it more difficult for your lender to confirm your bank history.
Don't deliver 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 remains yours until the sale closes. Although your FSBO seller may not realize this, your good faith money should be used for the buyer's closing expenses. We recommend that you put the deposit into a trust account, or get an attorney to hold it until closing. The final disposition of good faith money, in the case of a failed transaction, should be included in the contract with your seller.
Morgage 27 can answer questions about these "Don'ts" and many others. Call us: 4054206125.