Things to Avoid While Buying a New Home
What's better than buying a bunch of new furniture to adorn your future home? Nothing. But making large purchases before closing can be an error. Until your loan closes, there are still some hoops to jump through. Here are some things to stay clear of before closing to assure your transaction goes well.
Don't overspend on big-ticket items It may be tempting to buy that new easy-chair for the soon-to-be-yours parlor, but it's advisable to avoid making large buys like furniture, appliances, electronic equipment, or cars until closing. Using credit cards to buy furniture could compromise your lending process by changing your numbers dramatically. Because lending institutions are perusing your bank accounts, a large cash purchase is also not advised.
Don't get a new job. Stability in your career history is a positive thing to lending institutions. Getting a new career before you start the application process for a mortgage may not get in the way of your approval at all. However, switching careers in the middle of your loan process may influence whether or not you are approved.
Don't move money around or change banks. Bank statements from the last few months for accounts in your name (savings, checking, money market, and other accounts) will be reviewed as the lending institution makes decisions regarding your loan application. In order to avoid fraud, lenders require a clear and consistent picture of how you earn your living and where any additional wealth comes from. Even for innocent reasons, moving around money or changing banks may make it difficult for your lending institution to confirm your bank history.
Don't deliver earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until the completion of the deal, any good faith money remains yours. Although some individual sellers may not know this, your good faith funds must be used for the buyer's closing expenses. An attorney or other type of neutral party can hang onto your funds, or you may put them temporarily into a trust account until you close. Your purchase contract should dictate to whom the money goes if the transaction falls through.
At Executive Lending Group, we answer questions about this process every day. Call us: (405) 822-1957.