What to Avoid During your Home Purchase
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In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of carrying their enthusiasm straight to the mall or furniture store. Until your loan closes, there are still some hurdles to jump. We have given you a list of actions below you will want to avoid when waiting for closing.
Don't empty your wallet on big-ticket items It may be tempting to buy that new Turkish rug for the soon-to-be-yours parlor, but it's best to stay away from making big ticket buys like furniture, appliances, electronic equipment, or vacations until your home loan closes. Financing your furniture with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. Using cash to purchase expensive items can also be a problem: many banks consider your available cash when approving your application.
Don't go on a career search. Stability in your work history is a good thing to lending institutions. Changing jobs may not compromise your ability to qualify for a loan - particularly if you are improving your salary. But for some people, switching jobs during the mortgage approval process might raise concern and hinder your application.
Don't take your accounts to a new bank or move around your cash. While the lending institution considers your loan application, you will likely be required to produce bank statements for recent months for your checking accounts, savings accounts, money market accounts and other liquid wealth. The lender is looking for a consistent rise and fall of your money each month, in the interest of avoiding fraud. No matter the reason, switching banks or moving funds from one account to another might raise a red flag with your lender and slow your approval process.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, delivered to his door. Until the completion of the deal, any good faith deposit remains yours. The good faith funds are to go toward your expenses upon closing; the FSBO seller may not understand this. A neutral party, like an attorney can hang onto your deposit, or you may put it temporarily into a trust account until you close. The disposition of good faith funds, in the case of a failed transaction, should be documented in the contract with the seller.
At Blue Door Mortgage, we answer questions about this process every day. Give us a call at (617) 527-BLUE(2583).