What to Avoid During a Home Purchase
What's more fun than getting a bunch of new stuff to adorn your future home? Nothing. But buying big ticket items before your loan closes can be harmful. There still remain a few major hurdles to jump before your loan closes. Here are some things to stay clear of before closing to assure the transaction goes smoothly.
Don't empty your wallet on big-ticket items Although you will be listing ways to turn your new home into a castle, avoid big ticket purchases like appliances, electronics, or furniture. We also recommend that you keep away from vacations and vehicle purchases until the closing of your loan. You may send up red flags with your lender if you buy your appliances on your credit cards in the middle of your loan process. Because lenders are looking closely at your bank accounts, a large cash purchase is also not advised.
Don't go on a job search. Lenders look for a consistent work history on your application forms. Changing jobs may not compromise your ability to qualify for a mortgage loan - particularly if you are improving your salary. However, switching jobs during the loan process might affect whether or not you are approved.
Don't switch banks or move finances around in your accounts. Bank statements from recent months for all of your accounts (checking, savings, money market, and other assets) will be reviewed as the lending institution makes decisions regarding your loan application. Your lender is looking for a steady flow of your money over the pay period, in order to avoid fraud. No matter the reason, switching banks or moving money from one account to another may raise a red flag with your lender and slow down your application process.
Don't give funds directly to your seller (generally in cases of "for sale by owner") for earnest money. As a rule, your earnest money is yours, not the seller's up until the sale is final. The good faith money is to be applied to your expenses closing; some FSBO sellers might not know this. We recommend that you put the deposit into a trust account, or get an attorney to hold it until closing. The contract should specify who keeps the money if the home purchase fails.
First Access Mortgage can answer questions about these "Don'ts" and many others. Give us a call: (985) 429-1770.