Things to Avoid While Buying a New Home
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What's more fun than getting a bunch of new stuff to adorn your future home? Nothing. But making big purchases before closing can be harmful. Keep in mind that until closing, your lender is watching your finances very closely. We have listed some things below you will want to stay away from when waiting for your loan to close.
Don't make expensive purchases. You may be itching to turn your new living room into a home magazine cover, or celebrate your new dream home, but stay away from expensive purchases like furniture, cars, appliances, or vacations until your loan closes. Financing your furniture with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. Since lending institutions are reviewing your bank accounts, a large cash purchase is also a mistake.
Don't go job hunting. Lenders feel comfortable seeing a consistent job history on your application. Getting a new career before you apply for a mortgage may not compromise your approval at all. But for some people, switching jobs during the mortgage loan approval process could bring concern and stymie your approval.
Don't switch your accounts to a new bank or move around your cash. Your lender will instruct the submission of recent bank statements for accounts in your name: checking, savings, money market, and other assets. To detect potential fraud, most lending institutions need a thorough paper trail to document the source of all incoming funds. No matter the reason, changing banks or transferring funds could raise a red flag with the lender and slow your qualification process.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. Until the sale is complete, any good faith deposit remains yours. Although your seller might not realize this, the good faith money must be applied to the buyer's closing expenses. It's best to put the funds into a trust account, or get a neutral party, like a lawyer to hold them until the closing of the sale. Should your home purchase fail, your contract with the seller should specify where the earnest money should go.
At Pinnacle Lending Group inc, we answer questions about this process every day. Call us at 480-442-3949.