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 buying big ticket items before your loan closes could be trouble. Until your loan closes, there still remain some hoops to jump through. We have given you a list of things below you will want to stay away from when waiting for closing.
Don't empty your wallet on big-ticket items Although you will be planning ways to turn your new home into a castle, try to stay away from major purchases like appliances, electronics, or expensive furnishings. We also recommend that you avoid vacations and car purchases until your loan closes. Your credit numbers could change suddenly if you make a huge purchase using plastic. It's even a mistake to make those large purchases with cash. Lending Institutions are looking at your cash on hand when considering your loan.
Don't get a new job. Stability in your career history is a good thing to lenders. Getting a new job may not jeopardize your ability to qualify for a mortgage loan - especially if you are getting a bigger paycheck. However, if you switch careers before approval, your process could fail or be stalled.
Don't take your accounts to a new bank or move around your money. Bank statements from recent months for accounts in your name (checking, savings, money market, and other assets) will be reviewed as the lender makes decisions regarding your loan application. To eliminate fraud, lenders want to see clear documentation of how you earn your living and where additional wealth comes from. No matter the reason, changing banks or moving money from one account to another might raise a red flag with your lender and impede your loan process.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. Until closing, the good faith money actually belongs to you. Some sellers may not realize that the good faith money should be used for your expenses upon closing. A neutral party, like an attorney can hold your funds, or you may place them temporarily into a trust account until closing. The disposition of good faith funds, in the case of a failed transaction, should be specified in the contract with the seller.
At America's Home Loans, we answer questions about this process every day. Give us a call: 701.222.0100.