Things to Avoid While Purchasing a Home
What's more fun than buying a bunch of new furniture to go in your future home? Not much. But buying big ticket items before closing can be harmful. Until the keys are handed over, there are still some hurdles to jump. Here are some actions to refrain from before closing to assure the transaction goes smoothly.
Don't buy big-ticket items. Although you will be listing ways to turn your new house into a showplace, try to stay away from big ticket purchases like appliances, electronics, or expensive furnishings. You will also want to avoid vacations and car purchases until your loan closes. Your credit numbers could be altered suddenly if you purchase new furniture using plastic. Because lenders are reviewing your financial accounts, a large cash purchase is also not advised.
Don't go on a job search. Consistency in your work history is a positive thing to lenders. Changing jobs may not jeopardize your ability to qualify for a loan - especially if you are getting a better salary. However, if you switch careers before you qualify, your mortgage process could fail or be bogged down.
Don't switch your accounts to a new bank or move around your finances. While your lending institution considers your loan application, you will likely be required to produce bank statements for recent months on your checking and savings accounts, money market accounts and other liquid assets. In order to avoid fraud, lenders require clear documentation of how you earn your living and where additional wealth comes from. Changing banks or transferring finances elsewhere - even if its just to consolidate funds - could hinder the review of your funds.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. As a rule, your good faith deposit is yours, not the seller's up until closing. Some sellers might not realize that this good faith money should go toward your expenses upon closing. A neutral party, like an attorney can hang onto your funds, or you may put them temporarily into a trust account until closing. The disposition of earnest funds, in the case of a failed transaction, should be documented in the purchase agreement with your seller.
At America's Home Loans, we answer questions about this process every day. Give us a call: 701.222.0100.