What to Avoid During your Home Purchase
What's more fun than buying a bunch of new stuff to go in your future home? Not much. But buying big ticket items before your loan closes can be an error. It's best to remember that until you get the keys, your lender is watching your finances very closely. We have listed some actions below we suggest you stay away from when waiting for closing.
Don't make expensive purchases. Although you may 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 avoid vacations and car purchases until the closing of your loan. Financing new furniture with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. It's even a red flag to make those big-ticket purchases using cash. Lenders are looking at your available cash when considering your loan.
Don't get a new career. Stability in your career history is a good thing to lending institutions. Getting a new career before you start the application process for a mortgage may not get in the way of your approval at all. However, if you switch careers before your loan is approved, your mortgage process could fail or be stalled.
Don't switch your accounts to a new bank or move around your cash. Bank statements from recent months for accounts in your name (checking, savings, money market, and other accounts) will be analyzed as the lending institution makes decisions regarding your loan application. To avoid potential fraud, most lending institutions want thorough paperwork to determine the source of all incoming funds. Changing banks or transferring finances to another account - no matter the reason - might hinder the review of your accounts.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, made out directly to him. As a rule, your good faith deposit belongs to you, not to the seller until the sale is final. The FSBO seller might not realize that any good faith money must be used for your expenses upon closing. Find an attorney or other neutral party who can hang on to the deposit or place it in a trust account until closing. The purchase agreement should specify to whom the deposit goes if the transaction does not go through.
At Abbey Mortgage, we answer questions about this process every day. Call us at 352-369-4200.