What to Avoid During your Home Purchase
What's more fun than getting a bunch of new stuff to go in your future home? Nothing. But making big purchases before closing can be a misstep. Until closing, there still remain some hoops to jump through. Below you'll find a list of things to avoid during this crucial time of your home purchase.
Don't throw your money around. You may be tempted to buy that new easy-chair for the soon-to-be-yours parlor, but it's best to avoid making major purchases like furniture, appliances, jewelry, or vacations until closing. Using credit cards to buy new living room furniture could jeopardize your loan process by distorting your numbers. Since lenders are perusing your bank accounts, a large cash purchase is also a mistake.
Don't go on a job search. Consistency in your work history is a positive thing to lenders. Finding a new career (particularly one with a bigger paycheck) may not hinder your ability to qualify for a mortgage loan. But for some people, changing careers during the mortgage application process may bring concern and stymie your approval.
Don't change banks or move cash around in your accounts. Your lending institution will ask for recent bank statements of accounts in your name: checking, savings, money market, and other assets. Your lending institution is looking for a steady flow of your funds each month, in the interest of avoiding fraud. Even for practical purposes, transferring cash or switching banks may make it harder for your lender to confirm your bank history.
Don't give cash directly to your seller (usually in the case of of "for sale by owner") for earnest money. As a rule, your good faith money is yours, not the seller's until closing. Some FSBO sellers might not realize that your good faith funds must be applied to your expenses upon closing. An attorney or other type of neutral party can hold your earnest funds, or you may put them temporarily into a trust account until you close. Should your sale fall through, the contract with the seller should specify to whom the earnest money should go.
Southwest Funding #841 can walk you through the pitfalls of getting a mortgage. Give us a call: (512) 291-6100.