What to Avoid During your Home Purchase
What's better than buying a bunch of new furniture to go in your future home? Not much. But making big purchases before closing can be a misstep. Keep in mind that until closing, your lender is watching you very closely. Below you'll find a list of things to avoid during this crucial time of your home purchase.
Don't make expensive purchases. Although you will be planning ways to turn your new home into a castle, avoid major purchases like appliances, electronics, or furniture. We also recommend that you avoid vacations and car purchases until your loan closes. Financing your Plasma TVs with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. Using cash to buy big-ticket items can also create a problem: many banks take into consideration your cash on hand when approving your application.
Don't get a new career. Your recent job history should show stability. Getting a new career before you start the application process for a mortgage loan may not jeopardize your approval at all. However, finding a new job during your loan process may affect whether or not you are approved.
Don't move money around or change banks. While the lender considers your mortgage loan package, you will likely be required to submit bank statements for the last few months on your checking accounts, savings accounts, money market funds and other liquid wealth. Your lending institution will need to see a steady rise and fall of your money each pay period, in the interest of ruling out fraud. Even for innocent reasons, transferring funds or changing banks might make it more difficult for your lending institution to confirm your account history.
Don't give funds directly to your seller (usually in the case of of "for sale by owner") for earnest money. As a rule, your good faith deposit belongs to you, not to the seller up until closing. Although some FSBO sellers might not know this, any good faith funds should go toward your closing expenses. Get a lawyer or other neutral party who can hold the money or put it in a trust account until closing. The final disposition of earnest funds, in the case of a failed transaction, should be included in the purchase agreement with your seller.
At 1st Credential Mortgage Inc, we answer questions about this process every day. Call us at 2817780805.