What to Avoid During your Home Purchase
What's better than buying a bunch of new stuff to go in your future home? Nothing. But buying big ticket items before closing can be a mistake. There still remain a few major hurdles to jump before your loan closes. We have listed some things below we suggest you avoid when waiting for closing.
Don't overspend on big-ticket items Although you will be listing ways to turn your new home into a castle, avoid big ticket purchases like appliances, electronics, or expensive furnishings. You will also want to stay away from vacations and vehicle purchases until the closing of your loan. Your lender may send up red flags if you purchase new appliances on your credit cards in the middle of your loan process. Using cash to buy expensive items can even be an issue: most banks consider your available cash when approving your mortgage.
Don't go on a career search. Consistency in your career history is a positive thing to banks and other lenders. Getting a new job may not affect your ability to qualify for a mortgage loan - especially if you are improving your salary. However, getting a new career in the middle of the application process could influence whether or not you are approved.
Don't change banks or move money around in your bank accounts. As your lender considers your mortgage application, you will probably be required to submit bank statements for the last few months for your checking accounts, savings accounts, money market funds and other liquid assets. Your lending institution is looking for a steady flow of your funds over the month, in the interest of ruling out fraud. No matter the purpose, changing banks or transferring money might raise a red flag with the lender and impede your approval process.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. As a rule, your good faith money belongs to you, not the seller up until the sale is final. The good faith funds are to be used for your expenses upon closing; some individual sellers might not realize this. We recommend that you put the funds into a trust account, or get a neutral person, like an attorney to hold them until the closing of the sale. If your transaction fails, the purchase agreement should indicate where your good faith deposit should go.
Metro Mortgage can walk you through the pitfalls of getting a mortgage. Call us at 866-300-1550.