What to Avoid During a Home Purchase
What's better than getting a bunch of new furniture to adorn your future home? Not much. But buying big ticket items before closing could be trouble. There still remain a few major hurdles to jump before the keys are handed over. Below you'll find a list of things to stay away from during this critical time of your home purchase.
Don't buy luxury items. Although you will be listing ways to turn your new home into a castle, avoid major purchases like appliances, electronics, or expensive furnishings. You will also want to avoid vacations and car purchases until the closing of your loan. Your credit numbers could change suddenly if you make a huge purchase using credit cards. It's also a mistake to make those huge purchases using cash. Lending Institutions are looking at your cash reserve when considering your loan.
Don't look for a new job. Lending Institutions look for a consistent job history on your paperwork. Finding a new career (especially one with a bigger salary) may not affect your ability to qualify for a loan. However, getting a new job in the middle of the application process may affect your approval.
Don't move money around or switch banks. Most lenders will ask for recent bank statements on accounts in your name: checking, savings, money market, and other liquid assets. Your lender looks for a steady flow of your funds over the month, in order to avoid fraud. Even for innocent purposes, transferring finances or switching banks may make it harder for the lending institution to document your bank history.
Don't give money directly to your seller (generally in the case of of "for sale by owner") to be used as earnest money. Until closing, any earnest money remains yours. Your seller may not realize that any good faith funds should go toward your expenses at closing. It's advisable to put the deposit into a trust account, or get an attorney to hold it until the closing of the sale. Should your sale fall through, the contract with the seller should document to whom the good faith deposit should go.
At Abundance Home Mortgage, we answer questions about this process every day. Give us a call at (512) 335-7800.