What to Avoid During a Home Purchase
What's better than buying a bunch of new furnishings to adorn your future home? Nothing. 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 accounts very closely. Here are some actions to refrain from during the home buying process to assure the transaction goes well.
Don't make expensive purchases. You may be itching to order that new easy-chair for the soon-to-be-yours parlor, but it's advisable to avoid making big ticket buys like furniture, appliances, jewelry, or cars until your home loan closes. You may send up red flags with your lender if you purchase your furniture on your credit cards during your loan process. It's also a red flag to make those big-ticket purchases with cash. Lending Institutions are looking at your cash on hand when considering your loan.
Don't go on a career search. Your recent career history should show stability. Getting a new career before you start the application process for a mortgage loan may not compromise your approval at all. But for some people, changing jobs during the loan approval process may raise concern and stymie your approval.
Don't move money around or switch banks. Most lenders will ask for recent bank statements of accounts in your name: checking, savings, money market, and other assets. To avoid potential fraud, most lenders require a thorough paper trail to verify the source of all incoming funds. Even for practical purposes, moving around money or switching banks might make it harder for the lender to document your account history.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, delivered to his door. Your earnest money does not belong to the seller: it is actually yours until closing. Your seller may not realize that any earnest money must be applied to your expenses upon closing. Find a lawyer or other neutral person who will hang on to the deposit or place it in a trust account until closing. The contract should dictate who keeps the earnest funds if the transaction falls through.
Amity Mortgage LLC can answer questions about these "Don'ts" and many others. Call us at (203) 729-6681.