Things to Avoid While Purchasing a New Home
What's better than buying a bunch of new furnishings to go in your future home? Not much. But making large purchases before your loan closes can be an error. Until the house is really yours, there are still some hoops to jump through. We have given you a list of actions below we suggest you stay away from when waiting for closing.
Don't throw your money around. Although you may be planning ways to turn your new house into a showplace, try to stay away from big ticket purchases like appliances, electronics, or furniture. We also recommend that you stay away from vacations and car purchases until your loan closes. Using credit cards to buy new living room furniture could jeopardize your lending process by distorting your numbers. Because lending institutions are perusing your bank accounts, a large cash purchase is also not advised.
Don't go on a job search. Lenders feel comfortable seeing a consistent work history on your paperwork. Getting a new job before you start the application process for a mortgage may not compromise your approval at all. However, switching jobs during your loan process may affect whether or not you are approved.
Don't switch banks or move finances around in your bank accounts. While your lending institution considers your loan package, you will probably be required to produce bank statements for the last few months for your checking accounts, savings accounts, money market accounts and other liquid finances. The lender is looking for a steady flow of your money each pay period, in order to avoid fraud. No matter the reason, moving banks or moving money from one account to another could raise a red flag with the lender and slow your loan process.
Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. As a rule, your good faith deposit is yours, not the seller's until closing. Your good faith money is to go toward your expenses upon closing; some sellers might not understand this. An attorney or other type of neutral party can hold onto your funds, or you may put them temporarily into a trust account until closing. The disposition of earnest money, in the case of a failed transaction, should be specified in the contract with the seller.
MidTowne Mortgage can answer questions about these "Don'ts" and many others. Call us: (478) 746-2063.