Things to Avoid While Purchasing a New Home
What's more fun than getting a bunch of new stuff to go in your future home? Not much. But buying big ticket items before closing can be harmful. There are still a few major hurdles to jump before closing. We have listed some things below you will want to stay away from when waiting for closing.
Don't empty your wallet on big-ticket items You may be itching to turn your new kitchen into a showplace, or celebrate your new castle, but keep away from major purchases like furniture, jewelry, appliances, or vacations until the 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. Using cash to buy expensive items can also create a problem: most lenders take into consideration your available cash when approving your application.
Don't get a new career. Lending Institutions look for a consistent work history on your application forms. Getting a new career before you apply for a mortgage may not compromise your approval at all. However, if you switch careers before your loan is approved, your process could fail or be bogged down.
Don't move cash around or switch banks. While the lending institution reviews your loan application, you will probably be required to provide bank statements for the last few months for your checking and savings accounts, money market funds and other liquid finances. To avoid potential fraud, most lending institutions require a detailed paper trail to verify the source of all funds. Changing banks or moving finances to another account - even if its merely to consolidate funds - might hinder the review of your funds.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. Your good faith deposit does not belong to the seller: it is actually yours until closing. Although your seller may not know this, your good faith money should be applied to your closing expenses. We recommend that you put the funds into a trust account, or get an attorney to hold them until the deal closes. The contract should document to whom the funds go if the home purchase does not go through.
At Tenby J. Dahman, we answer questions about this process every day. Call us at 3038627760.