Things to Avoid While Purchasing a Home
What's more fun than getting a bunch of new stuff to go in your future home? Nothing. But buying big ticket items before closing can be harmful. Until closing, there still remain some hoops to jump through. Here are some things to avoid during the home buying process to assure your transaction goes smoothly.
Don't empty your wallet on big-ticket items Although you will be dreaming of ways to turn your new house into a showplace, avoid big ticket purchases like appliances, electronics, or furniture. You will also want to stay away from vacations and car purchases until your loan closes. You may send up red flags with your lender if you finance your electronics on your credit cards during your loan process. Using cash to purchase big-ticket items can even be a bad idea: many lenders consider your cash on hand when approving your mortgage.
Don't look for a new career. Lenders look for a consistent job history on your application forms. Finding a new career (particularly one with a better paycheck) may not jeopardize your ability to qualify for your mortgage. However, if you switch careers before your loan is approved, your mortgage process could fail or be stalled.
Don't switch banks or move cash around in your accounts. Bank statements from recent months for your accounts (savings, checking, money market, and other accounts) will probably be studied as the lending institution makes decisions regarding your approval. To detect fraud, lenders need clear documentation of how you earn your money and where additional wealth comes from. Switching banks or transferring funds elsewhere - no matter the reason - might hinder the review of your accounts.
Don't give your FSBO (for sale by owner) seller earnest money, delivered to his door. As a rule, your good faith deposit is yours, not the seller's up until the deal closes. Any earnest funds are to be used for your expenses upon closing; a FSBO seller may not understand this. A neutral party, like an attorney can hold onto your earnest money, or you may put it temporarily into a trust account until closing. The final disposition of earnest funds, if your home purchase fails, should be specified in the purchase agreement with the seller.
Abbey Mortgage can answer questions about these "Don'ts" and many others. Give us a call at 352-369-4200.