What to Avoid During a Home Purchase
What's more fun than buying a bunch of new furniture to go in your future home? Nothing. But buying big ticket items before your loan closes could be trouble. There are still a few major hurdles to jump before the keys are handed over. We have listed some actions below you will want to stay away from when waiting for closing.
Don't buy luxury items. Although you will be dreaming of ways to turn your new home into a castle, avoid big ticket purchases like appliances, electronics, or furniture. We also recommend that you keep away from vacations and car purchases until your loan closes. Financing new Plasma TVs 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 items can also create a bad idea: most banks take into consideration your available cash when approving your mortgage loan.
Don't get a new job. Consistency in your work history is a positive thing to banks and other lenders. Getting a new job may not affect your ability to qualify for a loan - especially if you are getting a better salary. But for some, changing jobs during the mortgage approval process may raise concern and stymie your application.
Don't switch your accounts to a new bank or move around your finances. Bank statements from the last two or three months for your accounts (checking, savings, money market, and other assets) will probably be studied as the lender makes decisions regarding your application. The lending institution will need to see a consistent flow of your money each pay period, in the interest of avoiding fraud. Even for innocent reasons, transferring money or switching banks may make it more difficult for your lending institution to confirm your bank history.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, delivered to his door. Until the completion of the deal, any good faith deposit remains yours. Although your seller might not realize this, your good faith funds should be applied to the buyer's closing expenses. We recommend that you put the funds into a trust account, or get a neutral person, like a lawyer to hold them until the closing of the sale. If your home purchase fails, the contract with the seller should specify where this earnest money should go.
U.S.A. Lending, Inc. can walk you through the pitfalls of getting a mortgage. Give us a call at 305-967-7200.