What to Avoid During a Home Purchase
What's more fun than buying a bunch of new furnishings to go in your future home? Not much. But making large purchases before your loan closes can be a misstep. Until closing, there are still some hoops to jump through. We have listed some things below we suggest you stay away from when waiting for closing.
Don't overspend on big-ticket items Although you will be planning ways to turn your new house into a castle, try to stay away from major purchases like appliances, electronics, or furniture. You will also want to avoid vacations and vehicle purchases until the closing of your loan. Using plastic to buy new living room furniture could compromise your loan process by altering your numbers dramatically. Using cash to purchase big items can also create a mistake: most lending institutions consider your cash on hand when approving your application.
Don't look for a new career. Your recent work history should show consistency. Getting a new job before you start the application process for a mortgage may not get in the way of your approval at all. However, if you switch careers before your loan is approved, your process could fail or be stalled.
Don't take your accounts to a new bank or move around your cash. While your lending institution reviews your loan package, you will probably be required to submit bank statements for recent months on your saving and checking accounts, money market funds and other liquid wealth. Your lender wants to see a consistent flow of your funds over the month, in order to avoid fraud. Even for innocent purposes, moving around funds or switching banks could make it harder for the lender to verify your bank history.
Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your good faith money does not belong to the seller: it remains yours until the sale closes. The good faith funds are to go toward your expenses closing; a FSBO seller may not know this. An attorney or other type of neutral party can hold onto your earnest money, or you may put it temporarily into a trust account until you close. Your purchase contract should indicate who gets the money if the home purchase fails.
First Southeast Mortgage Corporation can walk you through the pitfalls of getting a mortgage. Call us at 954.920.9799.