What to Avoid During a Home Purchase
What's more fun than getting a bunch of new furnishings to go in your future home? Not much. But making big ticket purchases before your loan closes can be an error. It's best to remember that until you get the keys, your lender is watching your accounts very closely. Below you'll find a list of things to stay away from during this crucial time of your home purchase.
Don't throw your money around. You may be itching to turn your new kitchen into a showplace, or celebrate your new castle, but stay away from expensive purchases like furniture, jewelry, appliances, or vacations until your loan closes. Financing your stainless steel appliances with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. Because lending institutions are examining your bank accounts, a large cash purchase is also a mistake.
Don't look for a new job. Stability in your job history is a positive thing to banks and other lenders. Getting a new job before you start the application process for a mortgage loan may not get in the way of your approval at all. However, if you switch careers before you qualify, your mortgage process could fail or be stalled.
Don't switch banks or move money around in your accounts. Most lenders will ask for recent bank statements on all of your accounts: savings, checking, money market, and other assets. In order to eliminate fraud, lenders look for a clear and consistent picture of how you earn your money and where any additional money comes from. Even for innocent reasons, moving around funds or changing banks may make it difficult for the lending institution to document your account history.
Don't give a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Until the completion of the deal, the good faith deposit remains yours. Any good faith money is to be used for your expenses closing; some FSBO sellers may not realize this. You'll want to put the funds into a trust account, or get a neutral person, like a lawyer to hold them until closing. If your sale falls through, the purchase contract should document to whom the good faith funds should go.
Abbey Mortgage can answer questions about these "Don'ts" and many others. Give us a call: 352-369-4200.