What to Avoid During a Home Purchase
What's better than buying a bunch of new furnishings to adorn your future home? Nothing. But making large purchases before your loan closes could be trouble. Until the house is really yours, there still remain some hurdles to jump. We have listed some actions below we suggest you stay away from when waiting for your loan to close.
Don't empty your wallet on big-ticket items You may be itching to order that new Turkish rug for the soon-to-be-yours parlor, but it's advisable to stay away from making big ticket buys like furniture, appliances, electronic equipment, or vacations until closing. Your credit numbers could be altered suddenly if you purchase new furniture using credit cards. Because lending institutions are reviewing your financial accounts, a large cash purchase is also a mistake.
Don't go on a job search. Your recent career history should show stability. Finding a new career (especially one with a bigger paycheck) may not change your ability to qualify for a loan. However, if you switch careers before approval, your process could fail or be bogged down.
Don't move cash around or change banks. As your lender reviews your loan package, you will likely be required to submit bank statements for the last two or three months on your checking and savings accounts, money market accounts and other liquid finances. In order to detect fraud, lenders need a consistent portrayal of how you earn your living and where any additional wealth comes from. Switching banks or transferring money to another account - no matter the purpose - may hinder the documentation of your funds.
Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith deposit belongs to you, not to the seller up until the sale is final. Although your seller may not know this, the earnest money should be used for your closing expenses. An attorney or other type of neutral party can hang onto your funds, or you may place them temporarily into a trust account until you close. The final disposition of good faith funds, if your transaction falls through, should be written in the purchase agreement with the seller.
At Abbey Mortgage, we answer questions about this process every day. Give us a call at 352-369-4200.