What to Avoid During a Home Purchase
What's more fun than getting a bunch of new furnishings to adorn your future home? Nothing. But making large purchases before your loan closes could be trouble. There are still a few major hurdles to jump before closing. Below you'll find a list of actions to stay away from during this crucial time of your home purchase.
Don't overspend on big-ticket items It may be tempting to order that new couch for the soon-to-be-yours living room, but it's best to stay away from making large purchases like furniture, appliances, electronic equipment, or vacations until closing. Financing your bedroom furniture with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. It's also a bad idea to make those large purchases using cash. Lending Institutions are examining your available cash when considering your loan.
Don't look for a new job. Lenders like to see a consistent job history on your paperwork. Changing jobs may not compromise your ability to qualify for a loan - especially if you are improving your salary. But in some cases, getting a new career during the mortgage loan application process may bring concern and stymie your application.
Don't move cash around or switch banks. Bank statements from the last few months for accounts in your name (checking, savings, money market, and other assets) will likely be studied as the lending institution considers your application. In order to detect fraud, lenders need clear documentation of how you earn your living and where additional money comes from. No matter the reason, moving banks or moving funds from one account to another may raise a red flag with your lender and slow your loan process.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. As a rule, your good faith deposit is yours, not the seller's until the deal closes. Although your FSBO seller may not understand this, the good faith money must go toward the buyer's closing expenses. We recommend that you put the funds into a trust account, or get an attorney to hold them until the deal closes. If your sale falls through, your contract with the seller should dictate where the earnest money should go.
Milestone Mortgage a Division of The Mortgage Company can walk you through the pitfalls of getting a mortgage. Call us: (303) 877-0415.