What to Avoid During your Home Purchase
What's more fun than getting a bunch of new furnishings to adorn your future home? Nothing. But buying big ticket items before closing can be a misstep. There are still a few major hurdles to jump before your loan closes. We have listed some things below you will want to stay away from when waiting for your loan to close.
Don't buy luxury items. You may be itching to turn your new living room into a home magazine cover, or celebrate your new dream home, but stay away from expensive purchases like furniture, cars, appliances, or vacations until the loan closes. You may send up red flags with your lender if you purchase new furniture on your credit cards during your loan process. Because lenders are examining your financial accounts, a large cash purchase is also not advised.
Don't get a new career. Consistency in your career history is a good thing to lending institutions. Getting a new career before you apply for a mortgage may not get in the way of your approval at all. But for some people, changing careers during the loan approval process might bring concern and affect your approval.
Don't change banks or move finances around in your accounts. As the lender reviews your loan application, you will probably be asked to submit bank statements for recent months on your checking and savings accounts, money market accounts and other liquid assets. To eliminate potential fraud, most lenders want detailed paperwork to determine the source of all cash. No matter the reason, changing banks or moving funds from one account to another might raise a red flag with your lender and impede your qualification process.
Don't give cash directly to your seller (commonly in cases of "for sale by owner") to be considered earnest money. Until the completion of the deal, the good faith deposit actually belongs to you. Your earnest money is to be applied to your expenses upon closing; some sellers might not realize this. An attorney or other type of neutral party can hold your funds, or you may put them temporarily into a trust account until you close. Your contract should indicate to whom the deposit goes if the transaction does not go through.
At Omni Mortgage Corp., we answer questions about this process every day. Call us at 7184417000.