Things to Avoid While Buying a Home
What's more fun than buying a bunch of new furnishings to go in your future home? Nothing. But making big purchases before your loan closes could be trouble. Until your loan closes, there are still some hurdles to jump. Below you'll find a list of actions to stay away from during this crucial time of your home purchase.
Don't buy luxury items. Although you may be dreaming of ways to turn your new house into a showplace, avoid big ticket purchases like appliances, electronics, or expensive furnishings. You will also want to avoid vacations and vehicle purchases until your loan closes. You may send up red flags with your lender if you purchase new electronics on your credit cards in the middle of your loan process. It's also a mistake to make those large purchases using cash. Lenders are examining your cash reserve when considering your loan.
Don't get a new job. Lenders feel comfortable seeing a consistent work history on your application. Changing jobs may not affect your ability to qualify for a loan - particularly if you are going to be making more money. However, switching jobs in the middle of the application process may influence your approval.
Don't change banks or move cash around in your accounts. While the lending institution reviews your loan package, you will likely be instructed to produce bank statements for the last few months on your checking accounts, savings accounts, money market accounts and other liquid assets. Your lender is looking for a consistent flow of your money over the month, in the interest of avoiding fraud. Switching banks or moving money to another account - no matter the purpose - may make it difficult for the lender to verify your funds.
Don't give money directly to your seller (usually in the case of of "for sale by owner") for a "good faith" deposit. Until closing, the good faith deposit remains yours. Your good faith money is to be used for your expenses upon closing; some sellers may not realize this. A neutral party, like an attorney can hang onto your funds, or you may put them temporarily into a trust account until you close. The final disposition of good faith money, in the case of a failed transaction, should be indicated in the purchase agreement with your seller.
At Omni Mortgage Corp., we answer questions about this process every day. Give us a call at 7184417000.