Things to Avoid While Buying a Home
What's better than getting a bunch of new furniture to adorn your future home? Not much. But buying big ticket items before closing could be trouble. Keep in mind that until closing, your lender is watching you very closely. We have listed some actions below we suggest you stay away from when waiting for your loan to close.
Don't buy big-ticket items. Although you will be listing ways to turn your new house into a castle, avoid major purchases like appliances, electronics, or expensive furnishings. We also recommend that you stay away from vacations and vehicle purchases until the closing of your loan. Using credit cards to buy new living room furniture could compromise your loan process by changing your numbers dramatically. Since lenders are examining your financial accounts, a large cash purchase is also a bad idea.
Don't look for a new job. Your recent work history should show stability. Getting a new job before you start the application process for a mortgage may not affect your approval at all. However, if you switch careers before you qualify, your process could fail or be slowed down.
Don't change banks or move finances around in your accounts. Your lending institution will instruct the submission of recent bank statements on accounts in your name: savings, checking, money market, and other liquid assets. The lending institution needs to see a steady flow of your money each pay period, in the interest of avoiding fraud. Changing banks or moving funds elsewhere - for whatever purpose - might hinder the review of your funds.
Don't deliver a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Your earnest money does not belong to the seller: it is actually yours until closing. A FSBO seller may not know that your good faith funds is to be applied to your expenses at closing. An attorney or other type of neutral party can hold onto your funds, or you may place them temporarily into a trust account until you close. The contract should dictate where the deposit goes if the home purchase fails.
At Contemporary Mortgage Services, Inc, we answer questions about this process every day. Call us at 407-834-3377.
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