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 making big purchases before closing could be trouble. There still remain a few major hurdles to jump before the house is realy yours. We have listed some things below we suggest you avoid when waiting for your loan to close.
Don't make expensive purchases. Although you will be dreaming of ways to turn your new home into a showplace, try to stay away from major purchases like appliances, electronics, or furniture. You will also want to stay away from vacations and vehicle purchases until your loan closes. Your lender may send up red flags if you purchase new furniture on your credit cards in the middle of your loan process. Using cash to purchase big items can also be a problem: many lenders consider your available cash when approving your loan.
Don't get a new career. Lending Institutions feel comfortable seeing a consistent work history on your application. Getting a new career before you start the application process for a mortgage loan may not get in the way of your approval at all. However, switching jobs in the middle of the loan process could affect whether or not you are approved.
Don't move cash around or switch banks. As the lending institution considers your loan application, you will likely be required to produce bank statements for the last few months for your saving and checking accounts, money market funds and other liquid assets. In order to eliminate fraud, lenders will need clear documentation of how you earn your money and where any additional funds come from. Switching banks or moving finances to another account - for whatever reason - could hinder the documentation of your accounts.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. Your good faith deposit does not belong to the seller: it remains yours until closing. The earnest money is to go toward your expenses upon closing; some sellers might not understand this. Get an attorney or other neutral person who can hang on to the deposit or put it in a trust account until you close. The disposition of earnest money, in the case of a failed transaction, should be included in the contract with your seller.
At Bright Vision Mortgage, we answer questions about this process every day. Give us a call at (904) 342-3622.