What to Avoid During your Home Purchase & Other Common FAQ's
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What's more fun than buying a bunch of new stuff to adorn your future home? Nothing. But buying big ticket items before your loan closes can be a misstep. There still remain a few major hurdles to jump before the keys are handed over. Below you'll find a list of things to avoid during this critical time of your home purchase.
Don't overspend on big-ticket items You may be tempted to buy that new Turkish rug for the soon-to-be-yours parlor, but it's best to avoid making large purchases like furniture, appliances, electronic equipment, or vacations until closing. Financing your Plasma TVs with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. Using cash to purchase expensive items can even create an issue: most lenders consider your available cash when approving your mortgage loan.
Don't look for a new job. Lending Institutions like to see a consistent work history on your application. Getting a new job may not jeopardize your ability to qualify for a mortgage loan - particularly if you are getting a bigger paycheck. However, switching careers during your loan process might affect whether or not you are approved.
Don't take your accounts to a new bank or move around your money. While the lending institution reviews your mortgage loan application, you will probably be instructed to produce bank statements for the last few months on your checking and savings accounts, money market accounts and other liquid finances. Your lending institution needs to see a consistent flow of your money each month, in order to avoid fraud. Even for practical purposes, transferring money or changing banks may make it harder for the lending institution to confirm your bank history.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. Until closing, the earnest money remains yours. A FSBO seller might not realize that your good faith money should be used for your expenses at closing. We recommend that you put the funds into a trust account, or get a neutral person, like a lawyer to hold them until closing. Should your home purchase fail, the contract with the seller should specify to whom this good faith funds should go.
At Leading Edge Mortgage Corp. , we answer questions about this process every day. Call us at 561-392-0040.