Things to Avoid While Buying a Home
What's more fun than buying a bunch of new furniture to go in your future home? Not much. But making big ticket purchases before closing could be trouble. Until your keys are in hand, there still remain some hoops to jump through. We have listed some actions below we suggest you avoid when waiting for your loan to close.
Don't empty your wallet on big-ticket items You may be itching to buy that new sofa for the soon-to-be-yours parlor, but it's best to avoid making major buys like furniture, appliances, electronic equipment, or cars until your home loan closes. Financing your furniture with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. It's even a red flag to make those big-ticket purchases with cash. Lending Institutions are looking at your cash reserve when considering your loan.
Don't go on a job search. Consistency in your job history is a positive thing to lenders. Getting a new career before you start the application process for a mortgage loan may not jeopardize your approval at all. However, if you switch careers before approval, your loan process could fail or be stalled.
Don't take your accounts to a new bank or move around your finances. Bank statements from the last two or three months for accounts in your name (savings, checking, money market, and other accounts) will likely be reviewed as the lender considers your application. In order to eliminate fraud, lenders look for a clear and consistent picture of how you earn your living and where additional funds come from. Changing banks or moving finances to another account - even if its just to consolidate funds - may hinder the documentation of your funds.
Don't give funds directly to your seller (usually in the case of of "for sale by owner") to be used as earnest money. As a rule, your earnest money is yours, not the seller's up until the deal closes. Your good faith funds are to go toward your expenses upon closing; some sellers might not realize this. Find a lawyer or other neutral party who can hold the funds or place them in a trust account until closing. The final disposition of good faith money, if your sale fails, should be indicated in the contract with your seller.
U.S.A. Lending, Inc. can answer questions about these "Don'ts" and many others. Call us: 305-967-7200.