Things to Avoid While Buying a Home
What's better than buying a bunch of new furnishings to adorn your future home? Nothing. But making big purchases before closing could be trouble. Until closing, there still remain some hurdles to jump. We have listed some actions below we suggest you avoid when waiting for closing.
Don't make expensive purchases. You may be itching to turn your new kitchen into a showplace, or celebrate your new castle, but stay away from expensive purchases like furniture, jewelry, appliances, or vacations until your loan closes. Your credit numbers could be altered suddenly if you purchase new furniture using credit cards. Using cash to buy big-ticket items can also create a mistake: most banks look at your cash on hand when approving your mortgage.
Don't get a new career. Stability in your job history is a positive thing to lending institutions. Getting a new job may not compromise your ability to qualify for a loan - especially if you are getting a bigger paycheck. However, getting a new job during your application process may affect whether or not you are approved.
Don't move money around or switch banks. Bank statements from the last two or three months for all of your accounts (savings, checking, money market, and other assets) will probably be analyzed as the lending institution considers your application. To avoid potential fraud, most lenders need a thorough paper trail to determine the source of all funds. Switching banks or transferring funds to another account - no matter the purpose - might hinder the review of your funds.
Don't give a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Your good faith deposit does not belong to the seller: it remains yours until the sale closes. The earnest funds are to be applied to your expenses closing; the FSBO seller may not understand this. Find an attorney or other neutral person who will hold the funds or place them in a trust account until you close. If your sale falls through, the contract with the seller should specify where this good faith deposit should go.
At Tier One Mortgage, LLC, we answer questions about this process every day. Give us a call at (585) 282-0960.