What to Avoid During a Home Purchase
What's better than buying a bunch of new furnishings to go in your future home? Nothing. But buying big ticket items before your loan closes can be a mistake. There still remain a few major hurdles to jump before your loan closes. Below you'll find a list of actions to stay away from during this crucial time of your home purchase.
Don't buy big-ticket items. It may be tempting to order that new sofa for the soon-to-be-yours living room, but it's advisable to stay away from making large purchases like furniture, appliances, jewelry, or cars until closing. Financing your stainless steel appliances with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. Since lenders are looking closely at your bank accounts, a large cash purchase is also not advised.
Don't look for a new career. Your recent job history should show stability. Getting a new career before you start the application process for a mortgage may not compromise your approval at all. However, getting a new job in the middle of your application process may influence your approval.
Don't move money around or change banks. While your lender reviews your loan application, you will probably be asked to provide bank statements for recent months on your saving and checking accounts, money market funds and other liquid wealth. Your lender hopes to see a steady rise and fall of your money each month, in the interest of avoiding fraud. Switching banks or transferring money elsewhere - even if its just to consolidate funds - might hinder the review of your accounts.
Don't give money directly to your seller (usually in the case of of "for sale by owner") for earnest money. Until the completion of the deal, the earnest money actually belongs to you. Your seller may not know that this good faith money is to be used for your expenses upon closing. Get an attorney or other neutral person who can hang on to the funds or place them in a trust account until closing. Should your sale fall through, the purchase contract should document where your earnest money should go.
Saab Mortgage can answer questions about these "Don'ts" and many others. Give us a call: 703-288-0777.