Things to Avoid While Buying a Home
What's more fun than getting a bunch of new furniture to go in your future home? Nothing. But buying big ticket items before closing could be trouble. There still remain a few major hurdles to jump before closing. We have given you a list of actions below you will want to avoid when waiting for closing.
Don't buy big-ticket items. You may be itching to buy that new sofa for the soon-to-be-yours den, but it's advisable to stay away from making large purchases like furniture, appliances, jewelry, or cars until your home loan closes. Financing new stainless steel appliances 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-ticket items can also be a mistake: many banks look at your cash reserve when approving your application.
Don't go on a career search. Lenders feel comfortable seeing a consistent job history on your application. Getting a new job before you apply for a mortgage loan may not jeopardize your approval at all. However, if you switch careers before your loan is approved, your mortgage process could fail or be slowed down.
Don't move finances around or switch banks. Bank statements from recent months for your accounts (checking, savings, money market, and others) will likely be studied as the lender makes decisions regarding your loan application. The lender is looking for a steady rise and fall of your funds each month, in order to avoid fraud. Changing banks or moving funds to another account - even if its just to pool funds - may hinder the documentation of your accounts.
Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. As a rule, your good faith deposit is yours, not the seller's until the sale is final. Although your seller might not realize this, any earnest money should go toward the buyer's closing expenses. Find an attorney or other neutral party who is able to hang on to the deposit or place it in a trust account until closing. If your home purchase fails, the purchase contract should specify where the good faith funds should go.
At U.S.A. Lending, Inc., we answer questions about this process every day. Give us a call at 305-967-7200.