What to Avoid During a Home Purchase
What's more fun than getting a bunch of new stuff to adorn 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. Here are some actions to refrain from before closing to assure the transaction goes smoothly.
Don't empty your wallet on big-ticket items You may be itching to turn your new kitchen into a showplace, or celebrate your new castle, but keep away from big purchases like furniture, jewelry, appliances, or vacations until the loan closes. Financing your furniture with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. It's even a mistake to make those big-ticket purchases using cash. Lenders are looking at your cash on hand when considering your loan.
Don't look for a new job. Your recent job history should show stability. Finding a new job (especially one with a better paycheck) may not hinder your ability to qualify for a mortgage. However, getting a new job in the middle of the loan process may affect your approval.
Don't switch your accounts to a new bank or move around your money. Your lender will ask for recent bank statements of accounts in your name: savings, checking, money market, and other liquid assets. To avoid fraud, lenders will need clear documentation of how you earn your living and where any additional wealth comes from. Even for innocent reasons, moving around money or switching banks could make it difficult for your lending institution to document your bank history.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. As a rule, your good faith money is yours, not the seller's up until the deal closes. Your seller might not realize that the earnest money should go toward your expenses at closing. A neutral party, like an attorney can hold your earnest money, or you may put it temporarily into a trust account until closing. Should your sale fall through, the purchase agreement should dictate where your good faith funds should go.
Tier One Mortgage, LLC can answer questions about these "Don'ts" and many others. Give us a call at (585) 282-0960.