Things to Avoid While Purchasing a Home
What's better than buying a bunch of new stuff to adorn your future home? Not much. But buying big ticket items before closing can be a misstep. It's wise to remember that until you get the keys, your lender is watching your accounts very closely. Below you'll find a list of things to avoid during this crucial time of your home purchase.
Don't buy luxury items. Although you may be planning ways to turn your new home into a castle, avoid big ticket purchases like appliances, electronics, or furniture. You will also want to stay away from vacations and car purchases until the closing of your loan. You may send up red flags with your lender if you buy your furniture on your credit cards during your loan process. It's even a red flag to make those huge purchases with cash. Lending Institutions are examining your cash on hand when considering your loan.
Don't get a new job. Your recent work history should show consistency. Changing jobs may not jeopardize your ability to qualify for a loan - particularly if you are going to be making more money. But for some, changing careers during the loan application process might bring concern and affect your approval.
Don't switch your accounts to a new bank or move around your money. As your lender considers your loan application, you will likely be asked to produce bank statements for recent months for your checking and savings accounts, money market funds and other liquid wealth. To detect potential fraud, most loans require detailed paperwork to document the source of all cash. No matter the reason, moving banks or transferring funds may raise a red flag with your lender and impede your qualification process.
Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your earnest money is yours, not the seller's until the deal closes. Any earnest funds are to be used for your expenses closing; the FSBO seller may not know this. A neutral party, like an attorney can hold onto your funds, or you may place them temporarily into a trust account until you close. Should your home purchase fail, your purchase agreement should document where your good faith deposit should go.
At Trustin Mortgage Corporation, we answer questions about this process every day. Give us a call: (302) 765-8089.
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