Things to Avoid While Purchasing a Home
What's better than buying a bunch of new furnishings to adorn your future home? Nothing. But buying big ticket items before closing could be trouble. Until the keys are handed over, there are still some hoops to jump through. We have given you a list of things below you will want to stay away from when waiting for your loan to close.
Don't throw your money around. You may be itching to turn your new kitchen into a showplace, or celebrate your new dream home, but stay away from major purchases like furniture, cars, appliances, or vacations until closing. You may send up red flags with your lender if you finance your furniture on your credit cards in the middle of your loan process. Because lending institutions are looking closely at your financial accounts, a large cash purchase is also a mistake.
Don't get a new career. Lenders like to see a consistent job history on your application forms. Getting a new job before you start the application process for a loan may not get in the way of your approval at all. However, if you switch careers before your loan is approved, your mortgage process could fail or be bogged down.
Don't switch banks or move cash around in your bank accounts. As the lender reviews your mortgage package, you will likely be instructed to provide bank statements for the last few months for your checking and savings accounts, money market funds and other liquid finances. To avoid potential fraud, most lending institutions need detailed paperwork to document the source of all incoming funds. Even for innocent purposes, transferring cash or changing banks might make it difficult for your lending institution to confirm your account history.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, delivered to his door. Until closing, any good faith deposit actually belongs to you. The earnest money is to go toward your expenses closing; some sellers may not know this. Find a lawyer or other neutral party who can hold the funds or place them in a trust account until closing. The final disposition of earnest money, 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. Call us: 701.222.0100.