What to Avoid During a Home Purchase
What's more fun than buying a bunch of new furnishings to adorn your future home? Nothing. But buying big ticket items before your loan closes can be a misstep. Until the keys are handed over, there still remain some hoops to jump through. Below you'll find a list of actions to avoid during this crucial time of your home purchase.
Don't overspend on big-ticket items You may be tempted to buy that new easy-chair for the soon-to-be-yours parlor, but it's best to stay away from making large buys like furniture, appliances, electronic equipment, or cars until closing. Financing your stainless steel appliances with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. Because lending institutions are perusing your bank accounts, a large cash purchase is also a bad idea.
Don't go on a job search. Your recent career history should show consistency. Getting a new career before you start the application process for a mortgage loan may not jeopardize your approval at all. However, if you switch careers before you qualify, your loan process could fail or be stalled.
Don't change banks or move cash around in your bank accounts. Most lenders will require you to produce recent bank statements for accounts in your name: checking, savings, money market, and other assets. To avoid potential fraud, most loans want detailed paperwork to document the source of all funds. Changing banks or transferring money to another account - for whatever purpose - may hinder the documentation of your funds.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. Until the sale is complete, the good faith deposit remains yours. Your earnest funds are to go toward your expenses closing; some individual sellers may not understand this. We recommend that you put the money into a trust account, or get a neutral party, like a lawyer, to hold it until the deal closes. If your transaction fails, the purchase contract should indicate to whom the good faith deposit should go.
At Carter Financial Solutions, we answer questions about this process every day. Give us a call: 866-840-8745 x2.