What to Avoid During a Home Purchase
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What's better than buying a bunch of new furniture to go in your future home? Not much. But buying big ticket items before your loan closes can be harmful. Until the house is really yours, there still remain some hoops to jump through. Below you'll find a list of actions to avoid during this crucial time of your home purchase.
Don't empty your wallet on big-ticket items Although you will be dreaming of ways to turn your new home into a showplace, avoid big ticket purchases like appliances, electronics, or expensive furnishings. You will also want to stay away from vacations and car purchases until your loan closes. Your credit numbers could be altered suddenly if you purchase new furniture using credit cards. Using cash to buy big-ticket items can even be an issue: most lending institutions look at your available cash when approving your mortgage loan.
Don't get a new job. Consistency in your career history is a good thing to lending institutions. Getting a new career before you start the application process for a mortgage loan may not get in the way of your approval at all. However, switching jobs during your loan process may affect your approval.
Don't take your accounts to a new bank or move around your finances. Your lender will instruct the submission of recent bank statements of all of your accounts: checking, savings, money market, and other assets. To avoid fraud, lenders want to see a clear and consistent picture of how you earn your living and where any additional money comes from. No matter the reason, changing banks or transferring funds might raise a red flag with your lender and slow down your approval process.
Don't give money directly to your seller (usually in cases of "for sale by owner") for earnest money. As a rule, your good faith deposit is yours, not the seller's until the deal closes. Although some individual sellers might not understand this, any good faith money should go toward the buyer's closing expenses. It's advisable to put the funds into a trust account, or get a neutral person, like an attorney to hold them until closing. Should your sale fall through, the purchase agreement should specify where your good faith funds should go.
At Gold Medal Mortgage, Inc., we answer questions about this process every day. Give us a call at 440-934-2100.