What to Avoid During your Home Purchase
What's more fun than getting a bunch of new stuff to go in your future home? Not much. But making big purchases before your loan closes can be a misstep. Keep in mind that until your keys are in hand, your lender is watching your finances very closely. We have listed some things below we suggest you stay away from when waiting for closing.
Don't throw your money around. Although you may be dreaming of ways to turn your new home into a castle, avoid major purchases like appliances, electronics, or expensive furnishings. You will also want to stay away from vacations and car purchases until your loan closes. Your lender may send up red flags if you finance new appliances on your credit cards in the middle of your loan process. Using cash to buy big items can also create a bad idea: most banks look at your available cash when approving your mortgage.
Don't look for a new job. Your recent work history should show consistency. Finding a new career (especially one with a bigger salary) may not hinder your ability to qualify for a mortgage. But for some, changing jobs during the loan approval process might bring concern and stymie your approval.
Don't switch your accounts to a new bank or move around your finances. While the lending institution considers your mortgage package, you will likely be required to submit bank statements for the last two or three months for your saving and checking accounts, money market funds and other liquid finances. To avoid potential fraud, most loans need detailed paperwork to determine the source of all funds. Even for innocent reasons, moving around funds or switching banks might make it difficult for your lender to document your bank history.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. As a rule, your earnest money is yours, not the seller's until closing. Although your seller might not know this, the good faith funds should be applied to the buyer's closing expenses. Find an attorney or other neutral party who can hold the money or put it in a trust account until you close. Your contract should document who gets the earnest funds if the transaction falls through.
Amity Mortgage LLC can walk you through the pitfalls of getting a mortgage. Give us a call: (203) 729-6681.