Things to Avoid While Buying a Home
What's better than getting a bunch of new stuff to adorn your future home? Not much. But buying big ticket items before your loan closes can be harmful. Until the keys are handed over, there are still some hoops to jump through. Below you'll find a list of things to stay away from during this crucial time of your home purchase.
Don't make expensive purchases. You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new castle, but keep away from major purchases like furniture, jewelry, appliances, or vacations until closing. You may send up red flags with your lender if you buy new electronics on your credit cards in the middle of your loan process. It's also a red flag to make those big-ticket purchases using cash. Lenders are examining your available cash when considering your loan.
Don't get a new career. Lending Institutions feel comfortable seeing a consistent work history on your application. Changing jobs may not compromise your ability to qualify for a loan - particularly if you are going to be making more money. However, if you switch careers before approval, your mortgage process could fail or be stalled.
Don't switch your accounts to a new bank or move around your cash. Your lending institution will require you to produce recent bank statements for your accounts: checking, savings, money market, and other liquid assets. The lending institution wants to see a steady flow of your funds over the month, in the interest of avoiding fraud. Switching banks or transferring finances to another account - for whatever reason - could make it harder for the lender to verify your funds.
Don't give cash directly to your seller (generally in the case of of "for sale by owner") to be considered earnest money. As a rule, your good faith money belongs to you, not to the seller up until the deal closes. Although your FSBO seller may not know this, the earnest money should be used for the buyer's closing expenses. A neutral party, like an attorney can hold onto your earnest money, or you may put it temporarily into a trust account until you close. Should your home purchase fail, your purchase contract should document where the good faith funds should go.
At Prime Capital Mortgage Corp, we answer questions about this process every day. Give us a call at 248-644-1200.
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