Things to Avoid While Buying a Home
What's better than getting a bunch of new furniture to adorn your future home? Not much. But buying big ticket items before your loan closes can be a mistake. Until your loan closes, there still remain some hurdles to jump. Here are some actions to avoid before closing to assure the transaction goes well.
Don't empty your wallet on big-ticket items You may be itching to buy that new Turkish rug for the soon-to-be-yours living room, but it's best to stay away from making major purchases like furniture, appliances, electronic equipment, or cars until closing. Your credit numbers could change suddenly if you make a huge purchase using credit cards. Since lending institutions are examining your bank accounts, a large cash purchase is also a mistake.
Don't get a new career. Consistency in your career history is a positive thing to lenders. Changing jobs may not jeopardize your ability to qualify for a loan - especially if you are improving your salary. But for some, changing jobs during the mortgage application process might bring concern and hinder your approval.
Don't switch your accounts to a new bank or move around your cash. While the lender reviews your mortgage loan package, you will probably be instructed to produce bank statements for recent months for your checking accounts, savings accounts, money market funds and other liquid finances. To avoid fraud, lenders need a consistent portrayal of how you earn your money and where additional funds come from. No matter the reason, moving banks or moving funds from one account to another might raise a red flag with the lender and slow down your loan process.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, made out directly to him. As a rule, your good faith deposit is yours, not the seller's until closing. Your earnest funds are to go toward your expenses upon closing; some sellers may not understand this. We recommend that you put the funds into a trust account, or get an attorney to hold them until closing. The disposition of earnest money, if your transaction falls through, should be indicated in the contract with your seller.
At Amity Mortgage LLC, we answer questions about this process every day. Call us at (203) 729-6681.