What to Avoid During a Home Purchase
What's more fun than buying a bunch of new stuff to adorn your future home? Not much. But buying big ticket items before closing can be harmful. There are still a few major hurdles to jump before closing. We have listed some actions below we suggest you avoid when waiting for your loan to close.
Don't buy luxury items. You may be itching to order that new sofa for the soon-to-be-yours living room, but it's advisable to stay away from making major buys like furniture, appliances, jewelry, or vacations until your home loan closes. Your lender may send up red flags if you purchase new furniture on your credit cards during your loan process. It's even a bad idea to make those big purchases with cash. Lenders are examining your available cash when considering your loan.
Don't look for a new career. Your recent job history should show consistency. Changing jobs may not affect your ability to qualify for a loan - especially if you are going to be making more money. But in some cases, changing careers during the loan approval process might raise concern and hinder your application.
Don't switch your accounts to a new bank or move around your finances. Bank statements from the last two or three months for accounts in your name (savings, checking, money market, and other accounts) will likely be reviewed as the lender makes decisions regarding your mortgage application. To detect potential fraud, most lenders need a detailed paper trail to determine the source of all incoming funds. Switching banks or moving funds to another account - even if its only to pool funds - might make it difficult for the lender to document your funds.
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 transaction is final. Although some FSBO sellers may not know this, your good faith money should be applied to the buyer's closing expenses. A neutral party, like an attorney can hang onto your deposit, or you may put it temporarily into a trust account until closing. If your home purchase fails, your contract with the seller should indicate where this good faith deposit should go.
At First Access Mortgage, we answer questions about this process every day. Give us a call at (985) 429-1770.