What to Avoid During your Home Purchase
What's better than getting a bunch of new furnishings to go in your future home? Nothing. But buying big ticket items before your loan closes can be harmful. Until your keys are in hand, there are still some hoops to jump through. Here are some things to stay clear of during the home buying process to be sure the transaction goes smoothly.
Don't overspend on big-ticket items Although you may be listing ways to turn your new home into a castle, avoid big ticket purchases like appliances, electronics, or expensive furnishings. You will also want to stay away from vacations and vehicle purchases until the closing of your loan. Your credit numbers could change suddenly if you make a huge purchase using credit cards. Since lending institutions are reviewing your bank accounts, a large cash purchase is also a bad idea.
Don't get a new career. Stability in your work history is a good thing to banks and other lenders. Getting a new career before you start the application process for a loan may not compromise your approval at all. But for some, changing jobs during the mortgage application process may bring concern and affect your approval.
Don't switch your accounts to a new bank or move around your money. Bank statements from the last few months for all of your accounts (savings, checking, money market, and other assets) will be analyzed as the lender makes decisions regarding your mortgage application. The lending institution will need to see a consistent rise and fall of your funds over the pay period, in order to rule out fraud. Even for innocent reasons, transferring money or switching banks may make it difficult for your lending institution to confirm your bank history.
Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your good faith money does not belong to the seller: it remains yours until the transaction is final. Although some individual sellers might not realize this, your good faith money should be used for the buyer's closing expenses. We recommend that you put the money into a trust account, or get a neutral party, like a lawyer, to hold it until the deal closes. If your sale falls through, your contract with the seller should specify where this earnest money should go.
Abundance Home Mortgage can walk you through the pitfalls of getting a mortgage. Give us a call at (512) 335-7800.