Things to Avoid While Buying a Home
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What's better than getting a bunch of new stuff to adorn your future home? Not much. But making big-ticket purchases before closing could be trouble. There are still a few major hurdles to jump before the keys are handed over. Here are some actions to avoid before closing to be sure your transaction goes well.
Don't make expensive purchases. You may be itching to order that new sofa for the soon-to-be-yours den, but it's best to stay away from making big ticket purchases like furniture, appliances, jewelry, or vacations until closing. Your credit numbers could change suddenly if you purchase new furniture using plastic. Because lending institutions are reviewing your financial accounts, a large cash purchase is also not advised.
Don't go job hunting. Lenders feel comfortable seeing a consistent career history on your application. Changing jobs may not compromise your ability to qualify for a mortgage loan - particularly if you are improving your salary. But for some, switching jobs during the mortgage approval process may bring concern and stymie your application.
Don't switch banks or move cash around in your bank accounts. Most lenders will require you to provide recent bank statements of accounts in your name: checking, savings, money market, and other assets. The lender hopes to see a steady rise and fall of your funds over the pay period, in the interest of avoiding fraud. Even for practical reasons, moving around finances or changing banks may make it difficult for your lending institution to confirm your bank history.
Don't give money directly to your seller (usually in the case of of "for sale by owner") to be considered earnest money. As a rule, your good faith deposit is yours, not the seller's until the sale is final. Some sellers may not realize that these good faith funds must go toward your expenses upon closing. 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 money, in the case of a failed transaction, should be indicated in the purchase agreement with the seller.
At Blue Sky Funding, LLC, we answer questions about this process every day. Call us: 817-616-3651.