Things to Avoid While Buying a Home
What's better than getting a bunch of new furnishings to adorn your future home? Not much. But buying big ticket items before closing could be trouble. Keep in mind that until your keys are in hand, your lender is watching your finances very closely. Here are some things to stay clear of before closing to be sure the transaction goes well.
Don't buy luxury items. You may be itching to order that new couch for the soon-to-be-yours living room, but it's best to stay away from making large purchases like furniture, appliances, electronic equipment, or vacations until closing. Using plastic to buy new living room furniture could jeopardize your loan process by distorting your numbers. Using cash to buy expensive items can also be a bad idea: many lenders look at your cash on hand when approving your loan.
Don't go on a job search. Lending Institutions feel comfortable seeing a consistent job history on your application forms. Changing jobs may not affect your ability to qualify for a loan - especially if you are getting a better salary. However, if you switch careers before approval, your mortgage process could fail or be bogged down.
Don't take your accounts to a new bank or move around your cash. Most lenders will instruct the submission of recent bank statements on accounts in your name: savings, checking, money market, and other liquid assets. To detect potential fraud, most lenders need a thorough paper trail to determine the source of all cash. Even for innocent reasons, transferring funds or changing banks may make it difficult for your lending institution to confirm your bank history.
Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until closing, the good faith money remains yours. Although some FSBO sellers might not realize this, your good faith money must be applied to the buyer's closing expenses. An attorney or other type of neutral party can hold your deposit, or you may put it temporarily into a trust account until you close. The final disposition of earnest money, in the case of a failed transaction, should be included in the purchase agreement with the seller.
AAA Mortgage LLC can answer questions about these "Don'ts" and many others. Give us a call: 816-272-5550.