What to Avoid During a Home Purchase

What's better than getting a bunch of new stuff to adorn your future home? Not much. But buying big ticket items before your loan closes could be trouble. Until your keys are in hand, there are still some hurdles to jump. Here are some actions to avoid before closing to assure your transaction goes smoothly.

Don't buy luxury items. You may be tempted to order that new couch for the soon-to-be-yours den, but it's advisable to avoid making big ticket purchases like furniture, appliances, electronic equipment, or cars until your home loan closes. Your credit numbers could be altered suddenly if you purchase new furniture using plastic. Using cash to buy big items can also create a bad idea: many lending institutions look at your cash reserve when approving your application.

Don't look for a new career. Lending Institutions feel comfortable seeing a consistent job history on your paperwork. Finding a new career (particularly one with a better paycheck) may not hinder your ability to qualify for your loan. However, if you switch careers before your loan is approved, your loan process could fail or be slowed down.

Don't switch your accounts to a new bank or move around your money. Bank statements from recent months for accounts in your name (savings, checking, money market, and other assets) will likely be analyzed as the lending institution makes decisions regarding your mortgage application. Your lender needs to see a steady flow of your money over the pay period, in order to avoid fraud. Even for practical purposes, moving around finances or switching banks may make it harder for the lender to confirm your account history.

Don't give funds directly to your seller (usually in cases of "for sale by owner") to be used as earnest money. As a rule, your good faith money is yours, not the seller's until the sale is final. Although your FSBO seller may not know this, your good faith money must be used for the buyer's closing expenses. Get an attorney or other neutral person who will hang on to the funds or put them in a trust account until you close. The final disposition of earnest funds, if your transaction falls through, should be specified in the contract with your seller.

At Sky Apply Mortgage, Inc, we answer questions about this process every day. Give us a call: (813) 200-7931.

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