Things to Avoid While Purchasing a Home
What's more fun than buying a bunch of new stuff to adorn your future home? Not much. But making big purchases before closing could be trouble. It's wise to remember that until you get the keys, your lender is watching your accounts very closely. Here are some actions to refrain from during the home buying process to be sure the transaction goes well.
Don't make expensive purchases. You may be itching to turn your new living room into a showplace, or celebrate your new castle, but keep away from major purchases like furniture, jewelry, appliances, or vacations until the loan closes. You may send up red flags with your lender if you buy your electronics on your credit cards in the middle of your loan process. Using cash to buy big items can also be a mistake: most lending institutions take into consideration your available cash when approving your mortgage.
Don't look for a new job. Your recent job history should show stability. Getting a new job before you start the application process for a loan may not affect your approval at all. But for some people, changing careers during the mortgage application process might raise concern and stymie your application.
Don't take your accounts to a new bank or move around your cash. Bank statements from recent months for your accounts (checking, savings, money market, and others) will be reviewed as the lender makes decisions regarding your approval. In order to detect fraud, lenders look for a clear and consistent picture of how you earn your living and where additional funds come from. Even for practical reasons, transferring finances or switching banks might make it difficult for the lending institution to verify your account history.
Don't give your FSBO (for sale by owner) seller earnest money, delivered to his door. Your good faith deposit does not belong to the seller: it is actually yours until closing. Your good faith funds are to be used for your expenses upon closing; some sellers may not know this. A neutral party, like an attorney can hold your earnest funds, or you may put them temporarily into a trust account until closing. The final disposition of earnest money, in the case of a failed transaction, should be included in the purchase agreement with the seller.
Alliance Lending Services can walk you through the pitfalls of getting a mortgage. Call us at 801.255.6582.