What to Avoid During a Home Purchase
What's more fun than buying a bunch of new furnishings to adorn your future home? Not much. But making large purchases before closing can be an error. There still remain a few major hurdles to jump before the house is realy yours. We have given you a list of actions below we suggest you stay away from when waiting for closing.
Don't buy luxury items. You may be tempted to buy that new Turkish rug for the soon-to-be-yours den, but it's advisable to stay away from making major buys like furniture, appliances, electronic equipment, or vacations until your home loan closes. Your lender may send up red flags if you purchase your furniture on your credit cards in the middle of your loan process. It's also a bad idea to make those big purchases using cash. Lending Institutions are looking at your cash on hand when considering your loan.
Don't go on a job search. Lenders like to see a consistent job history on your paperwork. Finding a new career (particularly one with a better paycheck) may not hinder your ability to qualify for your loan. But for some, switching jobs during the mortgage loan application process could raise concern and affect your approval.
Don't move finances around or change banks. Your lending institution will instruct the submission of recent bank statements for all of your accounts: savings, checking, money market, and other assets. To eliminate fraud, lenders need clear documentation of how you earn your money and where additional money comes from. Even for practical reasons, transferring finances or switching banks may make it more difficult for your lending institution to verify your account history.
Don't give cash directly to your seller (generally in the case of of "for sale by owner") to be used as a "good faith" deposit. As a rule, your good faith deposit belongs to you, not to the seller up until the deal closes. The earnest funds are to be applied to your expenses upon closing; some sellers may not know this. We recommend that you put the deposit into a trust account, or get an attorney to hold it until the closing of the sale. The disposition of good faith funds, if your home purchase fails, should be indicated in the purchase agreement with your seller.
U.S.A. Lending, Inc. can answer questions about these "Don'ts" and many others. Give us a call: 305-967-7200.