Things to Avoid While Purchasing a New Home
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What's more fun than getting a bunch of new furniture to adorn your future home? Not much. But making large purchases before your loan closes could be trouble. There are still a few major hurdles to jump before closing. Here are some things to avoid before closing to be sure your transaction goes well.
Don't empty your wallet on big-ticket items It may be tempting to order that new sofa for the soon-to-be-yours den, but it's best to avoid making large purchases like furniture, appliances, electronic equipment, or vacations until your home loan closes. Your lender may send up red flags if you purchase new furniture on your credit cards in the middle of your loan process. Because lending institutions are reviewing your financial accounts, a large cash purchase is also a mistake.
Don't get a new career. Your recent career history should show consistency. Changing jobs may not affect your ability to qualify for a loan - particularly if you are getting a bigger paycheck. However, if you switch careers before your loan is approved, your process could fail or be stalled.
Don't move money around or switch banks. Your lender will ask for recent bank statements of your accounts: checking, savings, money market, and other liquid assets. To eliminate fraud, lenders will need clear documentation of how you earn your money and where any additional wealth comes from. No matter the reason, moving banks or transferring funds might raise a red flag with your lender and slow your loan process.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. Until the sale is complete, the good faith deposit remains yours. Your good faith money is to go toward your expenses upon closing; some sellers may not understand this. A neutral party, like an attorney can hang onto your deposit, or you may put it temporarily into a trust account until you close. Should your home purchase fail, the contract with the seller should document where the earnest money should go.
At USA Mortgage, we answer questions about this process every day. Give us a call: (314) 628-2218.