What to Avoid During a Home Purchase
What's more fun than getting a bunch of new stuff to adorn your future home? Not much. But making big ticket purchases before your loan closes can be harmful. There still remain a few major hurdles to jump before your loan closes. We have listed some actions below you will want to avoid when waiting for your loan to close.
Don't buy luxury items. You may be tempted to order that new couch for the soon-to-be-yours den, but it's best to avoid making major buys like furniture, appliances, electronic equipment, or vacations until your home loan closes. Using credit cards to buy new living room furniture could jeopardize your lending process by altering your numbers dramatically. It's even a mistake to make those large purchases with cash. Lending Institutions are examining your available cash when considering your loan.
Don't get a new career. Your recent work history should show stability. Finding a new job (particularly one with a bigger paycheck) may not change your ability to qualify for your mortgage loan. However, switching jobs during your loan process may affect your approval.
Don't take your accounts to a new bank or move around your cash. As your lending institution reviews your mortgage loan application, you will probably be asked to provide bank statements for the last two or three months for your checking and savings accounts, money market accounts and other liquid finances. In order to detect fraud, lenders need clear documentation of how you earn your money and where any additional wealth comes from. Changing banks or moving money to another account - even if its just to consolidate funds - could make it harder for the lender to review your funds.
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, any good faith deposit remains yours. The good faith funds are to be used for your expenses upon closing; some sellers might not know 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. Should your sale fall through, your purchase contract should document where your good faith deposit should go.
Financial Edge Mortgage Corp. can answer questions about these "Don'ts" and many others. Give us a call at 425-508-9988.
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