What to Avoid During a Home Purchase
What's more fun than buying a bunch of new stuff to adorn your future home? Nothing. But making big ticket purchases before closing can be a misstep. Keep in mind that until closing, your lender is watching your finances very closely. We have given you a list of actions below you will want to stay away from when waiting for closing.
Don't buy luxury items. You may be itching to turn your new living room into a home magazine cover, or celebrate your new dream home, but keep away from major purchases like furniture, cars, appliances, or vacations until closing. Financing your bedroom furniture with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. It's even a bad idea to make those huge purchases using cash. Lending Institutions are examining your available cash when considering your loan.
Don't look for a new job. Stability in your work history is a positive thing to lenders. Changing jobs may not compromise your ability to qualify for a mortgage loan - particularly if you are getting a bigger paycheck. However, switching careers during your application process might influence whether or not you are approved.
Don't move money around or change banks. While your lending institution reviews your mortgage application, you will probably be required to produce bank statements for the last few months on your saving and checking accounts, money market accounts and other liquid wealth. To detect potential fraud, most lenders require a thorough paper trail to document the source of all cash. No matter the reason, changing banks or transferring money may raise a red flag with the lender and impede your qualification process.
Don't give cash directly to your seller (usually in cases of "for sale by owner") for a "good faith" deposit. As a rule, your good faith deposit is yours, not the seller's up until the deal closes. Although your FSBO seller may not know this, the good faith funds must go toward your closing expenses. You'll want to put the deposit into a trust account, or get an attorney to hold it until the deal closes. The contract should document to whom the deposit goes if the home purchase does not go through.
At Price Mortgage Group LLC, we answer questions about this process every day. Call us: 405-513-7700.