What to Avoid During a Home Purchase
What's better than buying a bunch of new stuff to go in your future home? Nothing. But buying big ticket items before your loan closes could be trouble. Keep in mind 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 crucial time of your home purchase.
Don't buy luxury items. Although you will be listing ways to turn your new home into a castle, try to stay away from major purchases like appliances, electronics, or furniture. We also recommend that you avoid vacations and car purchases until your loan closes. Your lender may send up red flags if you purchase your furniture on your credit cards in the middle of your loan process. Because lending institutions are examining your financial accounts, a large cash purchase is also not advised.
Don't get a new job. Stability in your career history is a good thing to banks and other lenders. Getting a new job may not affect your ability to qualify for a loan - particularly if you are improving your salary. However, if you switch careers before your loan is approved, your mortgage process could fail or be bogged down.
Don't take your accounts to a new bank or move around your cash. Your lending institution will require you to submit recent bank statements for your accounts: savings, checking, money market, and other liquid assets. In order to detect fraud, lenders require clear documentation of how you earn your money and where any additional wealth comes from. No matter the reason, changing banks or transferring funds can raise a red flag with your lender and impede your application process.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, made out directly to him. Your good faith deposit does not belong to the seller: it remains yours until closing. Although your seller might not realize this, any earnest money must be applied to your closing expenses. Find a lawyer or other neutral party who can hang on to the deposit or put it in a trust account until closing. The purchase agreement should indicate where the money goes if the home purchase does not go through.
At The Mortgage Exchange Service LLC, we answer questions about this process every day. Call us: 7032555810.