What to Avoid During a Home Purchase
What's more fun than buying a bunch of new furniture to go in your future home? Nothing. But making large purchases before closing could be trouble. There still remain a few major hurdles to jump before the house is realy yours. Below you'll find a list of actions to stay away from during this crucial time of your home purchase.
Don't empty your wallet on big-ticket items You may be itching to turn your new kitchen into a showplace, or celebrate your new dream home, but keep away from expensive purchases like furniture, jewelry, appliances, or vacations until closing. Using credit cards to buy new living room furniture could jeopardize your lending process by changing your numbers dramatically. Using cash to purchase expensive items can even be a mistake: many lending institutions look at your cash on hand when approving your loan.
Don't get a new career. Stability in your work history is a positive thing to lending institutions. Getting a new job before you apply for a mortgage may not jeopardize your approval at all. However, finding a new career in the middle of the loan process may influence whether or not you are approved.
Don't change banks or move money around in your accounts. Bank statements from the last two or three months for accounts in your name (savings, checking, money market, and others) will likely be studied as the lending institution makes decisions regarding your application. To eliminate fraud, lenders require a consistent portrayal of how you earn your living and where additional money comes from. Even for innocent purposes, transferring funds or changing banks might make it more difficult for the lending institution to confirm your account history.
Don't deliver a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Your good faith money does not belong to the seller: it is actually yours until the transaction is final. Your seller may not know that your good faith money must go toward your expenses at closing. You'll need to put the deposit into a trust account, or get a neutral party, like an attorney, to hold it until the closing of the sale. If your sale falls through, the contract with the seller should indicate where this good faith funds should go.
The Mortgage House can walk you through the pitfalls of getting a mortgage. Give us a call at 9037471800.