What to Avoid During a Home Purchase
What's better than getting a bunch of new furnishings to go in your future home? Nothing. But making big purchases before your loan closes can be a mistake. Keep in mind that until you get the keys, your lender is watching your accounts very closely. Here are some things to avoid during the home buying process to assure your transaction goes smoothly.
Don't overspend on big-ticket items You may be itching to turn your new living room into a showplace, or celebrate your new castle, but stay away from big purchases like furniture, jewelry, appliances, or vacations until your loan closes. Financing new bedroom furniture with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. Since lending institutions are examining your bank accounts, a large cash purchase is also a mistake.
Don't look for a new job. Lenders feel comfortable seeing a consistent career history on your paperwork. Finding a new career (especially one with a better salary) may not change your ability to qualify for your loan. But for some people, changing careers during the mortgage loan approval process may bring concern and stymie your application.
Don't take your accounts to a new bank or move around your finances. Your lender will require you to produce recent bank statements on all of your accounts: savings, checking, money market, and other assets. In order to avoid fraud, lenders want to see clear documentation of how you earn your living and where additional money comes from. Switching banks or moving money elsewhere - even if its just to consolidate funds - could hinder the review of your funds.
Don't give cash directly to your seller (generally in the case of of "for sale by owner") for earnest money. Until the completion of the deal, any good faith deposit actually belongs to you. Your seller may not realize that your good faith money is to be applied to your expenses at closing. An attorney or other type of neutral party can hold 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 contract with your seller.
My FL Home Loans, Inc. can answer questions about these "Don'ts" and many others. Give us a call: (727) 743-1620.