Things to Avoid While Purchasing a Home
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What's better than getting a bunch of new stuff to adorn your future home? Nothing. But buying big ticket items before closing could be trouble. There are still a few major hurdles to jump before the house is really yours. Here are some things to stay clear of before closing to assure your transaction goes smoothly.
Don't buy luxury items. You may be itching to buy that new couch for the soon-to-be-yours den, but it's advisable to stay away from making large buys like furniture, appliances, electronic equipment, or cars until your home loan closes. Your credit numbers could change suddenly if you make a huge purchase using credit cards. Since lending institutions are perusing your financial accounts, a large cash purchase is also a bad idea.
Don't go on a job search. Lending Institutions feel comfortable seeing a consistent work history on your paperwork. Finding a new career (particularly one with a better paycheck) may not jeopardize your ability to qualify for your mortgage loan. However, if you switch careers before you qualify, your loan process could fail or be stalled.
Don't move money around or change banks. Your lending institution will ask for recent bank statements of accounts in your name: savings, checking, money market, and other assets. To avoid potential fraud, most lending institutions want a detailed paper trail to determine the source of all funds. Even for innocent reasons, moving around funds or changing banks might make it difficult for the lending institution to confirm your bank history.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. Until the sale is complete, the good faith deposit actually belongs to you. Any good faith funds are to be used for your expenses upon closing; some FSBO sellers may not know this. A neutral party, like an attorney can hold onto your earnest funds, or you may place them temporarily into a trust account until closing. The final disposition of earnest funds, if your transaction falls through, should be specified in the contract with your seller.
At Citywide Home Loans, we answer questions about this process every day. Call us: 4808226290.