What to Avoid During a Home Purchase
What's more fun than buying a bunch of new stuff to go in your future home? Not much. But making big purchases before your loan closes can be harmful. There still remain a few major hurdles to jump before your loan closes. We have listed some things below we suggest you stay away from when waiting for your loan to close.
Don't throw your money around. Although you will be dreaming of ways to turn your new house into a castle, try to stay away from big ticket purchases like appliances, electronics, or expensive furnishings. We also recommend that you keep away from vacations and vehicle purchases until the closing of your loan. Using plastic to buy furniture could jeopardize your lending process by altering your numbers dramatically. Using cash to purchase expensive items can also create a mistake: many lending institutions consider your available cash when approving your loan.
Don't go on a job search. Stability in your career history is a good thing to lending institutions. Getting a new job before you apply for a mortgage loan may not compromise your approval at all. However, if you switch careers before you qualify, your mortgage process could fail or be stalled.
Don't switch banks or move cash around in your accounts. As the lending institution reviews your mortgage loan package, you will likely be required to provide bank statements for the last few months on your checking accounts, savings accounts, money market funds and other liquid finances. The lending institution is looking for a steady flow of your funds each month, in order to avoid fraud. Even for practical reasons, moving around money or changing banks may make it harder for your lender to confirm your bank history.
Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith deposit belongs to you, not to the seller up until the deal closes. The earnest funds are to be used for your expenses closing; some FSBO sellers might not understand this. You'll need to put the funds into a trust account, or get an attorney to hold them until the deal closes. Your contract should document who keeps the deposit if the home purchase fails.
At Saab Mortgage, we answer questions about this process every day. Call us: 703-288-0777.
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