What to Avoid During a Home Purchase
What's better than getting a bunch of new furnishings to adorn your future home? Nothing. But buying big ticket items before closing could be trouble. There still remain a few major hurdles to jump before your loan closes. Below you'll find a list of things to stay away from during this critical time of your home purchase.
Don't throw your money around. You may be itching to turn your new living room into a showplace, or celebrate your new castle, but keep away from big purchases like furniture, cars, appliances, or vacations until your loan closes. Your lender may send up red flags if you finance new furniture on your credit cards in the middle of your loan process. It's also a mistake to make those large purchases using cash. Lending Institutions are looking at your cash reserve when considering your loan.
Don't look for a new career. Your recent career history should show consistency. Getting a new career before you apply for a mortgage may not get in the way of your approval at all. But in some cases, switching jobs during the mortgage loan application process could bring concern and affect your approval.
Don't take your accounts to a new bank or move around your money. Your lending institution will instruct the submission of recent bank statements for all of your accounts: savings, checking, money market, and other assets. To avoid potential fraud, most lending institutions require a thorough paper trail to determine the source of all funds. Even for practical reasons, transferring finances or changing banks may make it harder for your lender to confirm your account history.
Don't give funds directly to your seller (generally in the case of of "for sale by owner") to be used as a "good faith" deposit. As a rule, your good faith deposit is yours, not the seller's up until closing. The earnest funds are to go toward your expenses upon closing; the individual seller may not understand this. A neutral party, like an attorney can hold onto your funds, or you may place them temporarily into a trust account until closing. The final disposition of earnest money, in the case of a failed transaction, should be indicated in the contract with your seller.
Rasmussen Mortgage can answer questions about these "Don'ts" and many others. Give us a call: 608-592-5600.