What to Avoid During your Home Purchase

What's more fun than getting a bunch of new furniture to go in your future home? Nothing. But making big ticket purchases before your loan closes could be trouble. Keep in mind that until you get the keys, your lender is watching your finances very closely. Here are some actions to refrain from before closing to be sure your transaction goes well.

Don't empty your wallet on big-ticket items You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new dream home, but stay away from major purchases like furniture, cars, appliances, or vacations until the loan closes. Using credit cards to buy new living room furniture could compromise your lending process by changing your numbers dramatically. It's also a bad idea to make those huge purchases using cash. Lenders are looking at your cash on hand when considering your loan.

Don't get a new job. Lending Institutions like to see a consistent career history on your application forms. Finding a new job (especially one with a bigger salary) may not jeopardize your ability to qualify for a loan. However, switching jobs during the loan process may affect your approval.

Don't switch your accounts to a new bank or move around your finances. As your lender considers your mortgage loan package, you will likely be instructed to produce bank statements for the last two or three months on your checking and savings accounts, money market funds and other liquid assets. To eliminate potential fraud, most lenders need a thorough paper trail to verify the source of all incoming funds. Even for innocent purposes, moving around cash or switching banks could make it more difficult for the lender to document your bank history.

Don't give cash directly to your seller (commonly in cases of "for sale by owner") to be considered earnest money. As a rule, your good faith money is yours, not the seller's until closing. The good faith money is to go toward your expenses closing; some individual sellers may not know this. We recommend that you put the funds into a trust account, or get an attorney to hold them until closing. If your sale falls through, the purchase contract should indicate to whom this earnest money should go.

Amity Mortgage LLC can answer questions about these "Don'ts" and many others. Call us at (203) 729-6681.

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