What to Avoid During a Home Purchase
What's better than buying a bunch of new furniture to go in your future home? Not much. 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 your finances very closely. Below you'll find a list of actions to avoid during this crucial time of your home purchase.
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 stay away from major purchases like furniture, jewelry, appliances, or vacations until the loan closes. Using credit cards to buy furniture could jeopardize your lending process by distorting your numbers. Since lenders are examining your financial accounts, a large cash purchase is also not advised.
Don't look for a new career. Your recent career history should show consistency. Changing jobs may not compromise your ability to qualify for a mortgage loan - particularly if you are getting a better salary. However, finding a new career during the application process might affect whether or not you are approved.
Don't change banks or move cash around in your accounts. As your lending institution considers your mortgage loan package, you will probably be instructed to provide bank statements for recent months on your checking and savings accounts, money market accounts and other liquid finances. Your lender looks for a consistent flow of your money each pay period, in the interest of avoiding fraud. Even for practical purposes, transferring finances or switching banks could make it more difficult for the lending institution to document your account history.
Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. Your good faith deposit does not belong to the seller: it is actually yours until the sale closes. Some FSBO sellers may not realize that your good faith funds is to be used for your expenses upon closing. An attorney or other type of neutral party can hang onto your deposit, or you may put it temporarily into a trust account until closing. The disposition of earnest money, if your transaction fails, should be specified in the purchase agreement with the seller.
Affirm Home Loans can walk you through the pitfalls of getting a mortgage. Give us a call: (972) 292-0448.