Don't Trip Yourself up While Buying your Home
What's better than buying a bunch of new furniture to adorn your future home? Not much. But buying big ticket items before your loan closes can be an error. There still remain a few major hurdles to jump before closing. Below you'll find a list of actions to stay away from during this critical time of your home purchase.
Don't buy luxury items. Although you may be dreaming of ways to turn your new home into a showplace, try to stay away from major purchases like appliances, electronics, or furniture. You will also want to keep away from vacations and vehicle purchases until your loan closes. Your credit numbers could change suddenly if you make a huge purchase using plastic. Using cash to buy big items can even create an issue: most lenders look at your available cash when approving your loan.
Don't look for a new career. Stability in your career history is a positive thing to lending institutions. Finding a new job (particularly one with a better paycheck) may not jeopardize your ability to qualify for your mortgage. However, if you switch careers before approval, your process could fail or be bogged down.
Don't change banks or move finances around in your accounts. Most lenders will instruct the submission of recent bank statements on accounts in your name: checking, savings, money market, and other assets. Your lender is looking for a steady flow of your funds each month, in the interest of ruling out fraud. Even for innocent purposes, transferring funds or changing banks may make it harder for the lender to document your bank history.
Don't deliver earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith money is yours, not the seller's until closing. Any good faith funds are to go toward your expenses closing; some FSBO sellers may not realize this. Get an attorney or other neutral person who will hold the money or place it in a trust account until closing. If your sale falls through, your contract with the seller should dictate to whom your earnest money should go.