What to Avoid During a Home Purchase
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What's better than buying a bunch of new furniture to adorn your future home? Nothing. However, purchasing 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. We have given you a list of things below you will want to avoid when waiting for your loan to close.
Don't overspend on big-ticket items You may be tempted to order that new couch for the soon-to-be-yours living room, but it's best to avoid making large purchases like furniture, appliances, jewelry, or vacations until your home loan closes. Financing new 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 mistake to make those huge purchases using cash. Lending Institutions are examining your cash on hand when considering your loan.
Don't go on a job search. Stability in your work history is a positive thing to banks and other lenders. Getting a new career before you start the application process for a mortgage may not affect your approval at all. However, if you switch careers before approval, your loan process could fail or be bogged down.
Don't switch banks or move money around in your bank accounts. While your lender reviews your mortgage loan application, you will probably be instructed to produce bank statements for the last few months for your saving and checking accounts, money market funds and other liquid finances. In order to avoid fraud, lenders look for a consistent portrayal of how you earn your money and where any additional money comes from. Even for practical purposes, transferring funds or changing banks could make it more difficult for your lending institution to confirm your bank history.
Don't give funds directly to your seller (commonly in the case of of "for sale by owner") to be considered a "good faith" deposit. Until closing, any good faith deposit remains yours. Any good faith money is to be applied to your expenses upon closing; some individual sellers may not realize this. A neutral party, like an attorney can hold onto your deposit, or you may put it temporarily into a trust account until you close. Your contract should specify who keeps the deposit if the home purchase fails.
Elite Financing Group can answer questions about these "Don'ts" and many others. Call us: .