What to Avoid During a Home Purchase
What's better than buying a bunch of new furniture to adorn your future home? Nothing. But making big purchases before your loan closes can be a mistake. It's wise to remember that until you get the keys, your lender is watching you very closely. Below you'll find a list of actions to avoid during this critical time of your home purchase.
Don't empty your wallet on big-ticket items You may be itching to turn your new living room into a home magazine cover, or celebrate your new castle, but keep away from major purchases like furniture, jewelry, appliances, or vacations until closing. Using plastic to buy furniture could compromise your loan process by distorting your numbers. Using cash to buy big-ticket items can even be an issue: many lending institutions consider your cash reserve when approving your application.
Don't get a new career. Lenders look for a consistent career history on your application. Getting a new career before you start the application process for a mortgage may not compromise your approval at all. But for some, switching jobs during the mortgage application process might raise concern and affect your approval.
Don't switch your accounts to a new bank or move around your money. Bank statements from recent months for all of your accounts (savings, checking, money market, and others) will be reviewed as the lending institution considers your application. The lender wants to see a steady rise and fall of your money each pay period, in the interest of avoiding fraud. Changing banks or moving finances to another account - for whatever purpose - could hinder the review of your funds.
Don't give cash directly to your seller (generally in cases of "for sale by owner") to be used as a "good faith" deposit. Your earnest money does not belong to the seller: it is actually yours until the sale closes. Although your FSBO seller might not realize this, your earnest money should be used for your closing expenses. It's best to put the funds into a trust account, or get a neutral person, like a lawyer to hold them until the closing of the sale. The disposition of earnest funds, in the case of a failed transaction, should be indicated in the contract with the seller.
Abundance Home Mortgage can walk you through the pitfalls of getting a mortgage. Call us: (512) 335-7800.