What to Avoid During a Home Purchase
What's more fun than buying a bunch of new furnishings to go in your future home? Not much. But making big purchases before closing could be trouble. Until the keys are handed over, there are still some hoops to jump through. We have given you a list of things below you will want to avoid when waiting for closing.
Don't buy luxury items. It may be tempting to buy that new Turkish rug for the soon-to-be-yours den, but it's best to stay away from making big ticket buys like furniture, appliances, electronic equipment, or vacations until your home loan closes. Your lender may send up red flags if you buy your furniture on your credit cards during your loan process. It's even a red flag to make those large purchases using cash. Lenders are looking at your cash reserve when considering your loan.
Don't go on a job search. Consistency in your work history is a good thing to lenders. Getting a new job may not compromise your ability to qualify for a mortgage loan - particularly if you are improving your salary. However, if you switch careers before approval, your mortgage process could fail or be slowed down.
Don't move cash around or change banks. Bank statements from the last few months for accounts in your name (checking, savings, money market, and other accounts) will probably be reviewed as the lending institution considers your approval. To eliminate potential fraud, most lenders need thorough paperwork to document the source of all funds. Even for innocent reasons, transferring finances or switching banks might make it difficult for the lending institution to document your account history.
Don't give funds directly to your seller (usually in cases of "for sale by owner") for earnest money. Until the sale is complete, the good faith deposit actually belongs to you. Although your FSBO seller might not understand this, any earnest money must be applied to the buyer's closing expenses. A neutral party, like an attorney can hold your funds, or you may put them temporarily into a trust account until you close. The disposition of good faith money, if your sale fails, should be written in the purchase agreement with the seller.
At Mason Mortgage Advisors, we answer questions about this process every day. Give us a call at 314-395-8300.
Got a Question?
Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.