What Not to Do When Buying a House
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What's better than getting a bunch of new furniture to adorn your future home? Not much. However, purchasing big-ticket items before your loan closes could be trouble. Until the keys are handed over, there are still some hurdles to jump. Below you'll find a list of things to stay away from during this crucial time of your home purchase.
Don't buy big-ticket items. You may be itching to turn your new kitchen into a showplace, or celebrate your new castle, but stay away from major purchases like furniture, electronics, appliances, or vacations until your loan closes. Financing your Plasma TVs with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. Since lenders are perusing your bank accounts, a large cash purchase is also not advised.
Don't get a new career. Stability in your job history is a positive thing to banks and other lenders. Changing jobs may not jeopardize your ability to qualify for a loan - especially if you are getting a bigger paycheck. But for some people, switching jobs during the loan approval process might raise concern and stymie your approval.
Don't switch your accounts to a new bank or move around your cash. Bank statements from the last few months for your accounts (savings, checking, money market, and other assets) will likely be analyzed as the lender makes decisions regarding your mortgage application. To avoid potential fraud, most lending institutions need thorough paperwork to determine the source of all cash. No matter the purpose, changing banks or transferring money may raise a red flag with the lender and slow your approval process.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. Your good faith deposit does not belong to the seller: it remains yours until the sale closes. Some sellers may not realize that this earnest money must be applied to your expenses at closing. Get an attorney or other neutral party who will hang on to the money or put it in a trust account until you close. Your purchase contract should indicate where the funds go if the home purchase falls through.
Hayes Home Loans can answer questions about these "Don'ts" and many others. Give us a call at 918-633-9916.