Things to Avoid While Purchasing a Home
What's more fun than buying a bunch of new furniture to go in your future home? Nothing. But making large purchases before your loan closes can be a misstep. Until your loan closes, there still remain some hoops to jump through. We have listed some things below we suggest you stay away from when waiting for closing.
Don't throw your money around. You may be itching to turn your new living room into a showplace, or celebrate your new dream home, but keep away from big purchases like furniture, cars, appliances, or vacations until your loan closes. Financing your stainless steel appliances with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. Since lenders are looking closely at your financial accounts, a large cash purchase is also not advised.
Don't go on a job search. Consistency in your work history is a positive thing to lending institutions. Getting a new career before you start the application process for a loan may not get in the way of your approval at all. However, if you switch careers before your loan is approved, your process could fail or be bogged down.
Don't switch banks or move money around in your accounts. Bank statements from recent months for accounts in your name (checking, savings, money market, and other assets) will probably be studied as the lending institution considers your approval. The lending institution will need to see a steady rise and fall of your funds each month, in the interest of avoiding fraud. No matter the purpose, changing banks or moving money from one account to another could raise a red flag with the lender and impede your loan process.
Don't deliver earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your earnest money is yours, not the seller's until the sale is final. Your seller might not know that this earnest money is to go toward your expenses upon closing. Get a lawyer or other neutral person who can hang on to the deposit or place it in a trust account until closing. Should your sale fall through, the contract with the seller should specify where your good faith deposit should go.
Financial Edge Mortgage Corp. can walk you through the pitfalls of getting a mortgage. Give us a call at 425-508-9988.
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