Things to Avoid While Purchasing a Home
What's better than getting a bunch of new furniture to go in your future home? Nothing. But buying big ticket items before closing can be a mistake. Keep in mind that until closing, your lender is watching your finances very closely. Below you'll find a list of actions to avoid during this crucial time of your home purchase.
Don't make expensive purchases. You may be tempted to order that new easy-chair for the soon-to-be-yours parlor, but it's best to avoid making major purchases like furniture, appliances, jewelry, or vacations until your home loan closes. Financing your stainless steel appliances with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. It's even a bad idea to make those large purchases with cash. Lenders are looking at your cash reserve when considering your loan.
Don't look for a new job. Your recent work history should show consistency. Getting a new job before you start the application process for a loan may not jeopardize your approval at all. But for some, switching jobs during the mortgage loan approval process may raise concern and stymie your approval.
Don't switch banks or move money around in your accounts. While the lending institution reviews your mortgage loan package, you will likely be required to produce bank statements for recent months for your checking accounts, savings accounts, money market accounts and other liquid wealth. The lender is looking for a consistent rise and fall of your funds over the month, in order to avoid fraud. No matter the reason, switching banks or moving money from one account to another can raise a red flag with your lender and slow down your application process.
Don't give money directly to your seller (usually in the case of of "for sale by owner") to be considered earnest money. As a rule, your earnest money is yours, not the seller's up until closing. Although some individual sellers may not understand this, the good faith money should go toward your closing expenses. It's wise to put the funds into a trust account, or get an attorney to hold them until the closing of the sale. The disposition of good faith funds, if your home purchase fails, should be specified in the contract with your seller.
The Mortgage Firm - Team Meyers can walk you through the pitfalls of getting a mortgage. Call us: (407) 889-4321.