Things to Avoid While Purchasing a Home
What's more fun than getting a bunch of new furnishings to adorn your future home? Not much. But making large purchases before your loan closes could be trouble. Until closing, there still remain some hurdles to jump. Below you'll find a list of actions to avoid during this crucial time of your home purchase.
Don't throw your money around. You may be itching to turn your new kitchen into a showplace, or celebrate your new castle, but keep away from major purchases like furniture, jewelry, appliances, or vacations until your loan closes. Financing your furniture with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. Using cash to purchase big items can even be an issue: most lending institutions consider your cash reserve when approving your mortgage loan.
Don't look for a new career. Stability in your work history is a good thing to banks and other lenders. Getting a new career before you apply for a mortgage loan may not get in the way of your approval at all. However, if you switch careers before approval, your loan process could fail or be bogged down.
Don't move money around or change banks. As your lender considers your mortgage package, you will probably be instructed to produce bank statements for the last few months on your saving and checking accounts, money market funds and other liquid wealth. The lending institution looks for a steady rise and fall of your money each month, in order to rule out fraud. Switching banks or transferring money elsewhere - no matter the purpose - may hinder the review of your funds.
Don't deliver a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Until the sale is complete, the good faith deposit actually belongs to you. Although your FSBO seller might not realize this, any good faith funds should go toward the buyer's closing expenses. Find a lawyer or other neutral party who can hang on to the money or put it in a trust account until you close. The purchase agreement should specify who gets the earnest funds if the home purchase fails.
New Millennium Mortgage Co. NMLS: 331173 can walk you through the pitfalls of getting a mortgage. Call us: (941) 366-5800.