What to Avoid During your Home Purchase
What's better than buying a bunch of new stuff to go in your future home? Nothing. But buying big ticket items before your loan closes can be a misstep. It's best to remember that until you get the keys, your lender is watching your finances very closely. Below you'll find a list of actions to stay away from during this critical time of your home purchase.
Don't make expensive purchases. You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new castle, but stay away from expensive purchases like furniture, cars, appliances, or vacations until closing. Financing your bedroom furniture with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. It's even a bad idea to make those big-ticket purchases with cash. Lending Institutions are looking at your available cash when considering your loan.
Don't go on a job search. Lending Institutions look for a consistent work history on your application forms. Getting a new career before you apply for a mortgage loan may not jeopardize your approval at all. However, finding a new job during your application process might influence your approval.
Don't change banks or move cash around in your bank accounts. Bank statements from recent months for all of your accounts (savings, checking, money market, and other accounts) will likely be reviewed as the lending institution considers your loan application. Your lending institution looks for a steady flow of your money each month, in order to rule out fraud. Even for practical reasons, moving around money or switching banks might make it more difficult for the lender to document your bank history.
Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your good faith deposit does not belong to the seller: it remains yours until closing. The earnest funds are to go toward your expenses upon closing; a individual seller may not realize this. Get a lawyer or other neutral party who is able to hang on to the funds or put them in a trust account until closing. Should your home purchase fail, your purchase contract should dictate where your earnest money should go.
Yamini Patel can walk you through the pitfalls of getting a mortgage. Give us a call: (832) 730-2000.