Things to Avoid While Purchasing a New Home
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What's better than getting a bunch of new furnishings to go in your future home? Not much. However, purchasing big-ticket items before your loan closes can be a mistake. Until your loan closes, there still remain some hurdles to jump. We have listed some things below we suggest you avoid when waiting for your loan to close.
Don't overspend on big-ticket items Although you will be planning ways to turn your new home into a castle, avoid big ticket purchases like appliances, electronics, or expensive furnishings. We also recommend that you avoid vacations and car purchases until the closing of your loan. Your credit numbers could change suddenly if you make a huge purchase using credit cards. It's also a red flag to make those huge purchases with cash. Lending Institutions are examining your cash on hand when considering your loan.
Don't go job hunting. Consistency in your job history is a good thing to banks and other lenders. Getting a new job before you start the application process for a mortgage may not jeopardize your approval at all. However, getting a new career during your loan process might influence whether or not you are approved.
Don't move money around or switch banks. Bank statements from recent months for accounts in your name (checking, savings, money market, and others) will probably be studied as the lender makes decisions regarding your approval. The lending institution is looking for a steady flow of your money over the month, in the interest of ruling out fraud. Even for innocent purposes, transferring cash or changing banks could make it difficult for your lender to verify your account history.
Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith deposit is yours, not the seller's until the sale is final. The earnest funds are to go toward your expenses upon closing; your individual seller might not realize this. Find an attorney or other neutral party who is able to hold the deposit or place it in a trust account until closing. The contract should dictate who gets the earnest funds if the transaction fails.
At Agape Home Mortgage, LLC, we answer questions about this process every day. Call us: 503-243-5626.