What to Avoid During your Home Purchase
What's more fun than getting a bunch of new furnishings to adorn your future home? Nothing. But buying big ticket items before closing can be harmful. There are still a few major hurdles to jump before the keys are handed over. Below you'll find a list of actions to avoid during this critical time of your home purchase.
Don't buy big-ticket items. You may be tempted to buy that new sofa for the soon-to-be-yours living room, but it's advisable to avoid making large buys like furniture, appliances, jewelry, or vacations until your home loan closes. Financing your furniture with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. Since lenders are perusing your bank accounts, a large cash purchase is also not advised.
Don't look for a new job. Lenders like to see a consistent career history on your paperwork. Changing jobs may not affect your ability to qualify for a mortgage loan - particularly if you are getting a bigger paycheck. But in some cases, switching jobs during the mortgage application process might raise concern and affect your application.
Don't move finances around or change banks. Your lending institution will ask for recent bank statements for accounts in your name: savings, checking, money market, and other assets. In order to detect fraud, lenders will need a consistent portrayal of how you earn your money and where any additional funds come from. Even for practical purposes, moving around cash or switching banks may make it more difficult for the lender to verify your account history.
Don't give cash directly to your seller (commonly in the case of of "for sale by owner") to be considered a "good faith" deposit. Your good faith money does not belong to the seller: it remains yours until the sale closes. Although some individual sellers may not realize this, the earnest money must be used for the buyer's closing expenses. Find an attorney or other neutral person who is able to hold the deposit or place it in a trust account until closing. The disposition of good faith funds, if your transaction fails, should be documented in the purchase agreement with your seller.
Crown Mortgage can answer questions about these "Don'ts" and many others. Call us: (434) 975-5626.
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