What to Avoid During a Home Purchase
What's better than getting a bunch of new stuff to adorn your future home? Not much. But making big ticket purchases before your loan closes can be a mistake. Until closing, there are still some hoops to jump through. We have given you a list of things below you will want to avoid when waiting for your loan to close.
Don't throw your money around. Although you will be dreaming of 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 your loan closes. Financing your furniture with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. Using cash to purchase expensive items can also create a bad idea: many lenders take into consideration your cash on hand when approving your mortgage loan.
Don't get a new career. Consistency in your job history is a good thing to lenders. Changing jobs may not compromise your ability to qualify for a loan - particularly if you are getting a better salary. But for some, changing jobs during the mortgage loan approval process may bring concern and affect your application.
Don't switch your accounts to a new bank or move around your money. Bank statements from the last two or three months for accounts in your name (savings, checking, money market, and other accounts) will probably be analyzed as the lending institution makes decisions regarding your loan application. Your lender is looking for a consistent flow of your funds each month, in the interest of avoiding fraud. Changing banks or transferring funds elsewhere - for whatever purpose - may hinder the documentation of your accounts.
Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your earnest money does not belong to the seller: it remains yours until the sale closes. Your earnest money is to be used for your expenses closing; some sellers may not know this. Find a lawyer or other neutral person who can hold the money or put it in a trust account until you close. The disposition of good faith funds, if your transaction falls through, should be specified in the contract with the seller.