What to Avoid During your Home Purchase
What's better than getting a bunch of new furnishings to adorn your future home? Not much. But making big ticket purchases before your loan closes can be an error. Keep in mind that until closing, your lender is watching your accounts very closely. Here are some things to refrain from before closing to assure your transaction goes well.
Don't empty your wallet on big-ticket items You may be itching to turn your new living room into a home magazine cover, or celebrate your new castle, but stay away from major purchases like furniture, jewelry, appliances, or vacations until closing. Financing new stainless steel appliances with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. It's also a red flag to make those big-ticket purchases with cash. Lending Institutions are looking at your available cash when considering your loan.
Don't get a new job. Lending Institutions feel comfortable seeing a consistent career history on your application forms. Finding a new job (especially one with a better salary) may not jeopardize your ability to qualify for your loan. But for some, changing careers during the loan application process might bring concern and hinder your application.
Don't switch your accounts to a new bank or move around your finances. Bank statements from recent months for all of your accounts (savings, checking, money market, and other accounts) will be reviewed as the lending institution makes decisions regarding your application. To avoid fraud, lenders require a clear and consistent picture of how you earn your money and where any additional money comes from. Changing banks or transferring finances to another account - no matter the purpose - could make it difficult for the lender to document your funds.
Don't give your FSBO (for sale by owner) seller earnest money, delivered to his door. Your earnest money does not belong to the seller: it remains yours until the transaction is final. Your FSBO seller might not realize that these good faith funds must go toward your expenses upon closing. A neutral party, like an attorney can hold onto your earnest funds, or you may put them temporarily into a trust account until closing. If your transaction fails, the purchase contract should specify where this earnest money should go.
At New Millennium Mortgage Co. NMLS: 331173, we answer questions about this process every day. Call us: (941) 366-5800.
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