Things to Avoid While Buying a Home
What's more fun than buying a bunch of new stuff to adorn your future home? Nothing. But buying big ticket items before closing could be trouble. Until your keys are in hand, there still remain some hoops to jump through. Here are some actions to stay clear of before closing to be sure your transaction goes smoothly.
Don't buy big-ticket items. You may be tempted to order that new Turkish rug for the soon-to-be-yours den, but it's advisable to avoid making big ticket buys like furniture, appliances, jewelry, or cars until your home loan closes. Financing new stainless steel appliances with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. Because lending institutions are reviewing your bank accounts, a large cash purchase is also not advised.
Don't look for a new career. Lending Institutions look for a consistent job history on your application forms. Getting a new job before you start the application process for a mortgage loan may not get in the way of your approval at all. However, if you switch careers before you qualify, your loan process could fail or be slowed down.
Don't switch 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 liquid assets. To avoid potential fraud, most lenders need a detailed paper trail to document the source of all cash. No matter the purpose, changing banks or moving money from one account to another might raise a red flag with the lender and slow your loan process.
Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until the completion of the deal, any good faith money remains yours. Although your FSBO seller might not realize this, any good faith funds must go toward your closing expenses. Get an attorney or other neutral party who can hold the deposit or place it in a trust account until you close. The purchase contract should specify to whom the funds go if the home purchase fails.
At Oak Mortgage Company, LLC, we answer questions about this process every day. Call us: (856) 988-8100 x6615.