Things to Avoid While Purchasing a Home
What's more fun than buying a bunch of new furniture to adorn your future home? Nothing. But buying big ticket items before closing can be a misstep. 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 crucial time of your home purchase.
Don't throw your money around. You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new dream home, but keep away from big purchases like furniture, cars, appliances, or vacations until closing. Financing new stainless steel appliances with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. Using cash to buy big-ticket items can also be a bad idea: many banks take into consideration your cash on hand when approving your loan.
Don't look for a new career. Lending Institutions like to see a consistent work history on your application. Getting a new career before you start the application process for a mortgage loan may not jeopardize your approval at all. But for some, switching jobs during the mortgage approval process may raise concern and affect your approval.
Don't switch banks or move money around in your accounts. Bank statements from the last few months for your accounts (savings, checking, money market, and other assets) will likely be reviewed as the lender makes decisions regarding your mortgage application. The lending institution is looking for a steady rise and fall of your funds over the month, in order to avoid fraud. Changing banks or moving funds elsewhere - even if its merely to consolidate funds - might make it harder for your lender to review your funds.
Don't give your FSBO (for sale by owner) seller earnest money, delivered to his door. Until closing, any good faith deposit actually belongs to you. Your seller may not realize that these good faith funds should go toward your expenses upon closing. We recommend that you put the funds into a trust account, or get an attorney to hold them until closing. Your contract should dictate to whom the funds go if the home purchase does not go through.