What to Avoid During a Home Purchase
What's better than getting a bunch of new furnishings to adorn your future home? Not much. But making big ticket purchases before closing can be a mistake. Keep in mind that until your keys are in hand, your lender is watching you very closely. Here are some actions to refrain from before closing to be sure your transaction goes smoothly.
Don't throw your money around. You may be itching to turn your new living room into a showplace, or celebrate your new dream home, but keep away from expensive purchases like furniture, jewelry, appliances, or vacations until your loan closes. Financing new bedroom furniture with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. It's also a bad idea to make those big-ticket purchases using cash. Lending Institutions are looking at your cash on hand when considering your loan.
Don't look for a new career. Lending Institutions feel comfortable seeing a consistent career history on your application. Finding a new career (especially one with a bigger paycheck) may not hinder your ability to qualify for a mortgage loan. But for some people, changing careers during the loan application process may bring concern and hinder your approval.
Don't change banks or move finances around in your bank accounts. While your lender reviews your loan application, you will probably be asked to submit bank statements for the last few months on your checking and savings accounts, money market accounts and other liquid wealth. To avoid potential fraud, most lenders want thorough paperwork to determine the source of all cash. Switching banks or transferring funds elsewhere - no matter the reason - could make it difficult for the lender to verify your funds.
Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until the sale is complete, any good faith money remains yours. Any good faith funds are to be applied to your expenses upon closing; the FSBO seller may not know this. Get an attorney or other neutral person who can hold the deposit or put it in a trust account until you close. Your contract should specify who gets the deposit if the transaction does not go through.
At Wize Mortgage LLC, we answer questions about this process every day. Give us a call: .