What to Avoid During your Home Purchase
What's better than buying a bunch of new furniture to go in your future home? Not much. But buying big ticket items before closing can be a misstep. Keep in mind that until you get the keys, your lender is watching your finances very closely. We have given you a list of things below you will want to stay away from when waiting for closing.
Don't empty your wallet on big-ticket items You may be tempted to buy that new Turkish rug for the soon-to-be-yours den, but it's best to stay away from making big ticket purchases like furniture, appliances, jewelry, or vacations until your home loan closes. Your lender may send up red flags if you purchase your appliances on your credit cards in the middle of your loan process. It's also a red flag to make those large purchases using cash. Lending Institutions are examining your cash on hand when considering your loan.
Don't go on a job search. Lending Institutions like to see a consistent career history on your application forms. Getting a new career before you start the application process for a mortgage loan may not get in the way of your approval at all. However, getting a new job during the loan process may influence whether or not you are approved.
Don't change banks or move cash around in your accounts. While the lender reviews your mortgage loan application, you will probably be required to provide bank statements for recent months for your saving and checking accounts, money market accounts and other liquid wealth. In order to eliminate fraud, lenders need clear documentation of how you earn your living and where any additional money comes from. No matter the purpose, changing banks or moving money from one account to another can raise a red flag with your lender and impede your application process.
Don't give cash directly to your seller (usually in the case of of "for sale by owner") to be used as earnest money. As a rule, your good faith deposit is yours, not the seller's up until the deal closes. Although your FSBO seller may not understand this, any good faith money must be used for your closing expenses. Get a lawyer or other neutral party who is able to hang on to the money or place it in a trust account until closing. The contract should dictate who keeps the money if the home purchase does not go through.
Metro Mortgage can answer questions about these "Don'ts" and many others. Give us a call: 866-300-1550.