What to Avoid During a Home Purchase
What's more fun than buying a bunch of new furniture to go in your future home? Not much. But buying big ticket items before closing can be an error. There are still a few major hurdles to jump before your loan closes. Below you'll find a list of things to avoid during this crucial time of your home purchase.
Don't throw your money around. You may be tempted to order that new easy-chair for the soon-to-be-yours den, but it's best to avoid making large buys like furniture, appliances, electronic equipment, or cars until closing. You may send up red flags with your lender if you finance your electronics on your credit cards during your loan process. Using cash to buy big-ticket items can also create an issue: most lending institutions take into consideration your available cash when approving your application.
Don't get a new career. Lenders like to see a consistent career history on your application forms. Getting a new job may not affect your ability to qualify for a mortgage loan - particularly if you are getting a bigger paycheck. However, if you switch careers before approval, your loan process could fail or be stalled.
Don't move cash around or switch banks. While the lending institution considers your loan package, you will probably be instructed to provide bank statements for the last two or three months for your saving and checking accounts, money market accounts and other liquid assets. To avoid potential fraud, most lenders need a thorough paper trail to verify the source of all incoming funds. Even for practical reasons, moving around funds or switching banks may make it harder for your lender to verify your account history.
Don't give cash directly to your seller (usually in cases of "for sale by owner") to be considered earnest money. Your good faith money does not belong to the seller: it remains yours until the transaction is final. Although your FSBO seller might not realize this, your earnest money should go toward your closing expenses. Find an attorney or other neutral person who will hang on to the funds or place them in a trust account until closing. If your transaction fails, the purchase agreement should document where the good faith funds should go.
New Millennium Mortgage Co. NMLS: 331173 can answer questions about these "Don'ts" and many others. Give us a call at (941) 366-5800.