What to Avoid During a Home Purchase
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What's better than getting a bunch of new furnishings to go in your future home? Nothing. However, purchasing big-ticket items before your loan closes can be harmful. Until your loan closes, 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 buy big-ticket items. You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new dream home, but keep away from big purchases like furniture, electronics, appliances, or vacations until closing. Using plastic to buy furniture could jeopardize your loan process by changing your numbers dramatically. Using cash to buy big-ticket items can even create a bad idea: many banks take into consideration your available cash when approving your loan.
Don't look for a new career Stability in your job history is a good thing to banks and other lenders. Finding a new career (especially one with a bump in salary) may not affect your ability to qualify for a loan. But in some cases, getting a new career during the mortgage loan approval process may bring concern and hinder your application.
Don't switch your accounts to a new bank or move around your money. Your lending institution will ask for recent bank statements for all of your accounts: checking, savings, money market, and other assets. The lending institution looks for a steady flow of your funds each pay period, in the interest of avoiding fraud. No matter the reason, changing banks or moving funds from one account to another can raise a red flag with your lender and slow down your approval process.
Don't give cash directly to your seller (generally in the case of of "for sale by owner") for a "good faith" deposit. Your good faith deposit does not belong to the seller: it remains yours until the transaction is final. Although your seller might not realize this, the earnest money should go toward your closing expenses. You'll want to put the deposit into a trust account, or get a neutral party, like a lawyer, to hold it until closing. Should your home purchase fail, the contract with the seller should indicate to whom this earnest money should go.
At American Mortgage Services, Inc., we answer questions about this process every day. Call us at 9013595912.