What to Avoid During your Home Purchase
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What's better than getting a bunch of new furnishings to adorn your future home? Nothing. But making big ticket purchases before closing could be trouble. There are still a few major hurdles to jump before the keys are handed over. We have given you a list of actions below we suggest you stay away from when waiting for closing.
Don't make expensive purchases. Although you may be dreaming of ways to turn your new house into a castle, try to stay away from major purchases like appliances, electronics, or furniture. We also recommend that you keep away from vacations and car purchases until the closing of your loan. Using plastic to buy furniture could compromise your lending process by changing your numbers dramatically. Because lenders are looking closely at your bank accounts, a large cash purchase is also a mistake.
Don't go on a career search. Consistency in your work history is a positive thing to banks and other lenders. Finding a new career (especially one with a bigger salary) may not jeopardize your ability to qualify for your mortgage. However, if you switch careers before your loan is approved, your loan process could fail or be stalled.
Don't change banks or move cash around in your bank accounts. Your lending institution will instruct the submission of recent bank statements on all of your accounts: checking, savings, money market, and other liquid assets. To avoid potential fraud, most loans want detailed paperwork to document the source of all funds. Even for practical reasons, moving around money or changing banks may make it difficult for your lending institution to document your bank history.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. Until the completion of the deal, any good faith money actually belongs to you. Although some FSBO sellers might not know this, the good faith money must be applied to your closing expenses. We recommend that you put the deposit into a trust account, or get an attorney to hold it until closing. If your transaction fails, your purchase agreement should indicate to whom your earnest money should go.
Diversified Mortgage Group can answer questions about these "Don'ts" and many others. Give us a call at (208) 853-7878.