Things to Avoid While Buying a Home
What's better than buying a bunch of new stuff to adorn your future home? Nothing. But making big purchases before your loan closes can be an error. There still remain a few major hurdles to jump before the keys are handed over. Below you'll find a list of things to stay away from during this critical time of your home purchase.
Don't buy big-ticket items. You may be itching to order that new easy-chair for the soon-to-be-yours den, but it's best to avoid making big ticket buys like furniture, appliances, electronic equipment, or cars until your home loan closes. Financing your stainless steel appliances with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. Using cash to buy big-ticket items can even be a problem: many lenders take into consideration your cash on hand when approving your mortgage.
Don't get a new job. Your recent career history should show stability. Getting a new job may not affect your ability to qualify for a mortgage loan - especially if you are getting a better salary. However, if you switch careers before you qualify, your mortgage process could fail or be stalled.
Don't move cash around or change banks. Bank statements from the last few months for accounts in your name (checking, savings, money market, and others) will be analyzed as the lender makes decisions regarding your approval. To detect potential fraud, most lenders require a thorough paper trail to document the source of all cash. Changing banks or moving money to another account - even if its only to pool funds - may hinder the documentation of your funds.
Don't give your FSBO (for sale by owner) seller earnest money, delivered to his door. Your earnest money does not belong to the seller: it remains yours until the sale closes. Some FSBO sellers might not realize that any good faith money should be applied to your expenses at closing. We recommend that you put the money into a trust account, or get an attorney to hold it until closing. The disposition of earnest money, in the case of a failed transaction, should be indicated in the purchase agreement with your seller.
At Alternative Mortgage Group, we answer questions about this process every day. Call us at 561-395-4264.