What to Avoid During a Home Purchase
What's better than buying a bunch of new furnishings to adorn your future home? Nothing. But buying big ticket items before your loan closes could be trouble. It's best to remember that until your keys are in hand, your lender is watching you very closely. Here are some things to refrain from during the home buying process to be sure your transaction goes smoothly.
Don't overspend on big-ticket items You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new castle, but keep away from big purchases like furniture, jewelry, appliances, or vacations until closing. Your credit numbers could change suddenly if you make a huge purchase using plastic. Using cash to purchase big items can also create a bad idea: most lending institutions consider your available cash when approving your loan.
Don't go on a career search. Your recent job history should show stability. Getting a new job may not compromise your ability to qualify for a loan - particularly if you are going to be making more money. But in some cases, changing jobs during the mortgage application process might raise concern and stymie your approval.
Don't change banks or move cash around in your bank accounts. As the lending institution considers your loan package, you will likely be instructed to provide bank statements for the last few months on your saving and checking accounts, money market funds and other liquid assets. To detect potential fraud, most lenders want detailed paperwork to verify the source of all incoming funds. No matter the reason, moving banks or transferring funds could raise a red flag with the lender and impede your application process.
Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith money is yours, not the seller's until the deal closes. The earnest money is to go toward your expenses closing; some FSBO sellers might not understand this. Find an attorney or other neutral party who can hang on to the deposit or put it in a trust account until you close. Your contract should document who keeps the deposit if the home purchase falls through.
At Tenby J. Dahman The Dahman Team , we answer questions about this process every day. Give us a call: 3038627760.