Things to Avoid While Purchasing a Home
What's better than getting a bunch of new stuff to go in your future home? Not much. But making large purchases before your loan closes can be an error. Until closing, there still remain some hoops to jump through. Here are some things to stay clear of during the home buying process to be sure the transaction goes well.
Don't buy big-ticket items. You may be tempted to order that new easy-chair for the soon-to-be-yours parlor, but it's advisable to avoid making major purchases like furniture, appliances, electronic equipment, or vacations until your home loan closes. Your credit numbers could change suddenly if you make a huge purchase using plastic. It's also a bad idea to make those large purchases with cash. Lenders are looking at your cash reserve when considering your loan.
Don't look for a new career. Your recent job history should show stability. Finding a new career (especially one with a bigger paycheck) may not hinder your ability to qualify for your mortgage. However, if you switch careers before you qualify, your process could fail or be stalled.
Don't switch your accounts to a new bank or move around your finances. Most lenders will instruct the submission of recent bank statements for all of your accounts: savings, checking, money market, and other liquid assets. To detect potential fraud, most lenders need detailed paperwork to verify the source of all cash. Even for innocent reasons, moving around cash or switching banks may make it difficult for the lender to verify your bank history.
Don't give a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Your good faith deposit does not belong to the seller: it remains yours until the transaction is final. The earnest money is to go toward your expenses upon closing; some FSBO sellers may not know this. An attorney or other type of neutral party can hang onto your deposit, or you may put it temporarily into a trust account until closing. Should your home purchase fail, the purchase agreement should dictate to whom your earnest money should go.
At Contemporary Mortgage Services, Inc, we answer questions about this process every day. Give us a call: 407-834-3377.
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