Things to Avoid While Buying a Home
What's more fun than getting a bunch of new stuff to go in your future home? Nothing. But making big ticket purchases before closing could be trouble. Until the house is really yours, there still remain some hurdles to jump. Here are some things to stay clear of before closing to be sure your transaction goes smoothly.
Don't throw your money around. You may be itching to turn your new living room into a showplace, or celebrate your new dream home, but stay away from major purchases like furniture, cars, appliances, or vacations until your loan closes. Using plastic to buy furniture could compromise your loan process by distorting your numbers. It's also a red flag to make those large purchases with cash. Lenders are looking at your cash on hand when considering your loan.
Don't look for a new career. Lenders feel comfortable seeing a consistent job history on your application. Getting a new job before you start the application process for a loan may not jeopardize your approval at all. But for some, changing careers during the loan application process might raise concern and hinder your application.
Don't move cash around or switch banks. Bank statements from the last two or three months for accounts in your name (savings, checking, money market, and other accounts) will be studied as the lending institution makes decisions regarding your mortgage application. Your lender will need to see a steady flow of your money over the month, in order to avoid fraud. Even for practical reasons, transferring finances or switching banks may make it harder for your lending institution to confirm your account history.
Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. As a rule, your earnest money is yours, not the seller's up until closing. A FSBO seller may not know that this earnest money must be used for your expenses at closing. Get a lawyer or other neutral party who will hang on to the money or put it in a trust account until you close. The disposition of good faith funds, in the case of a failed transaction, should be specified in the contract with the seller.
At Tier One Mortgage, LLC, we answer questions about this process every day. Call us: (585) 282-0960.