Things to Avoid While Purchasing a New Home
What's more fun than buying a bunch of new stuff to go in your future home? Not much. But making big ticket purchases before your loan closes can be an error. Until the keys are handed over, there still remain some hoops to jump through. Here are some things to stay clear of before closing to be sure the transaction goes smoothly.
Don't throw your money around. You may be tempted to order that new couch for the soon-to-be-yours parlor, but it's best to avoid making big ticket buys like furniture, appliances, electronic equipment, or cars until your home loan closes. Your credit numbers could change suddenly if you purchase new furniture using plastic. It's even a bad idea to make those big-ticket purchases with cash. Lenders are examining your cash on hand when considering your loan.
Don't go on a career search. Consistency in your career history is a good thing to banks and other lenders. Finding a new job (especially one with a bump in salary) may not affect your ability to qualify for a mortgage. But for some people, switching jobs during the loan application process might raise concern and affect your application.
Don't take your accounts to a new bank or move around your finances. Most lenders will ask for recent bank statements of accounts in your name: savings, checking, money market, and other assets. In order to eliminate fraud, lenders require clear documentation of how you earn your money and where additional funds come from. No matter the purpose, switching banks or moving funds from one account to another can raise a red flag with the lender and slow your application process.
Don't give money directly to your seller (generally in the case of of "for sale by owner") to be used as earnest money. Until the completion of the deal, the good faith deposit remains yours. Although your seller may not know this, the earnest money must be used for the buyer's closing expenses. We recommend that you put the funds into a trust account, or get a neutral person, like an attorney to hold them until the deal closes. The purchase agreement should dictate where the money goes if the transaction does not go through.
At The Lending Source, we answer questions about this process every day. Call us: 9736012122.