What to Avoid During a Home Purchase
Many new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller accepts their offer and the loan is approved. Until closing, there are still some hurdles to jump. Here are some actions to refrain from before closing to be sure the transaction goes well.
Don't buy big-ticket items. You may be itching to buy that new sofa for the soon-to-be-yours den, but it's best to avoid making large purchases like furniture, appliances, electronic equipment, or cars until your home loan closes. Financing new bedroom furniture with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. Since lending institutions are perusing your financial accounts, a large cash purchase is also not advised.
Don't look for a new career. Consistency 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. But in some cases, changing careers during the mortgage loan approval process may raise concern and stymie your approval.
Don't move cash around or change banks. While your lending institution reviews your mortgage application, you will probably be required to produce bank statements for the last few months on your checking and savings accounts, money market funds and other liquid finances. Your lender needs to see a steady flow of your money each pay period, in order to avoid fraud. Even for practical purposes, transferring funds or changing banks might make it more difficult for your lender to confirm your account history.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. Until the sale is complete, the good faith deposit actually belongs to you. Some sellers may not realize that the good faith money must be applied to your expenses upon closing. Find an attorney or other neutral party who will hang on to the deposit or put it in a trust account until you close. Your contract should dictate who gets the earnest funds if the home purchase fails.