What to Avoid During your Home Purchase
What's more fun than buying a bunch of new furniture to go in your future home? Nothing. But making big ticket purchases before closing could be trouble. It's best to remember that until closing, your lender is watching your accounts very closely. We have given you a list of things below you will want to avoid when waiting for your loan to close.
Don't buy big-ticket items. You may be itching to turn your new living room into a showplace, or celebrate your new castle, but keep away from expensive purchases like furniture, cars, appliances, or vacations until closing. Your lender may send up red flags if you finance new electronics on your credit cards during your loan process. It's even a red flag to make those large purchases using cash. Lenders are examining your available cash when considering your loan.
Don't look for a new career. Stability in your job history is a positive thing to lending institutions. Changing jobs may not compromise your ability to qualify for a loan - particularly if you are going to be making more money. But in some cases, switching jobs during the mortgage approval process may raise concern and affect your approval.
Don't move cash around or change banks. While your lender considers your mortgage loan application, you will probably be required to produce bank statements for recent months for your checking and savings accounts, money market accounts and other liquid wealth. To detect potential fraud, most lending institutions need thorough paperwork to determine the source of all incoming funds. Switching banks or transferring funds to another account - even if its just to consolidate funds - might hinder the review of your accounts.
Don't hand over a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith deposit is yours, not the seller's up until the deal closes. The FSBO seller might not know that any good faith funds should go toward your expenses upon closing. Find a lawyer or other neutral party who can hold the deposit or put it in a trust account until you close. The contract should indicate who keeps the deposit if the home purchase falls through.
At Patricia Kotz, we answer questions about this process every day. Give us a call: 970-984-2766.