What to Avoid During a Home Purchase
What's more fun than getting a bunch of new stuff to go in your future home? Nothing. But making large purchases before your loan closes could be trouble. It's best to remember that until you get the keys, your lender is watching your finances very closely. We have given you a list of things below you will want to avoid when waiting for your loan to close.
Don't overspend on big-ticket items You may be itching to turn your new kitchen into a showplace, or celebrate your new dream home, but stay away from major purchases like furniture, cars, appliances, or vacations until closing. Using plastic to buy furniture could compromise your lending process by altering your numbers dramatically. Using cash to buy expensive items can also create a mistake: most banks look at your available cash when approving your mortgage.
Don't get a new job. Your recent work history should show consistency. Getting a new job before you apply for a loan may not compromise your approval at all. However, if you switch careers before your loan is approved, your mortgage process could fail or be stalled.
Don't change banks or move finances around in your bank accounts. Bank statements from the last two or three months for accounts in your name (savings, checking, money market, and other assets) will be analyzed as the lending institution makes decisions regarding your approval. The lender looks for a steady flow of your funds each pay period, in order to rule out fraud. Switching banks or transferring money to another account - no matter the reason - could make it harder for your lender to verify your funds.
Don't give your FSBO (for sale by owner) seller earnest money, delivered to his door. As a rule, your good faith deposit is yours, not the seller's up until closing. Your FSBO seller may not know that these good faith funds should go toward your expenses upon closing. It's wise to put the deposit into a trust account, or get a neutral party, like an attorney, to hold it until closing. The final disposition of earnest money, if your home purchase falls through, should be included in the contract with the seller.
Executive Lending Group can answer questions about these "Don'ts" and many others. Give us a call: (405) 822-1957.