What to Avoid During your Home Purchase
What's better than buying a bunch of new stuff to adorn your future home? Not much. But buying big ticket items before your loan closes could be trouble. There are still a few major hurdles to jump before the keys are handed over. We have given you a list of actions below you will want to avoid when waiting for closing.
Don't make expensive purchases. You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new dream home, but keep away from major purchases like furniture, jewelry, appliances, or vacations until your loan closes. Your credit numbers could change suddenly if you make a huge purchase using credit cards. It's even a mistake to make those large purchases with cash. Lending Institutions are looking at your available cash when considering your loan.
Don't go on a career search. Your recent career history should show stability. Getting a new job may not affect your ability to qualify for a loan - especially if you are going to be making more money. However, switching jobs in the middle of your application process might affect whether or not you are approved.
Don't switch banks or move cash around in your accounts. Your lender will ask for recent bank statements for your accounts: savings, checking, money market, and other assets. In order to detect fraud, lenders need a consistent portrayal of how you earn your money and where additional funds come from. Even for practical purposes, transferring finances or switching banks may make it more difficult for your lending institution to verify your bank history.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, made out directly to him. Your good faith money does not belong to the seller: it is actually yours until the sale closes. The good faith money is to be used for your expenses closing; a individual seller might not know this. You'll need to put the funds into a trust account, or get an attorney to hold them until the deal closes. If your transaction fails, the purchase agreement should specify where this earnest money should go.