Things to Avoid While Buying a Home
What's better than getting a bunch of new furnishings to go in your future home? Nothing. But buying big ticket items before your loan closes could be trouble. It's wise to remember that until you get the keys, your lender is watching your accounts very closely. Below you'll find a list of things to avoid during this critical time of your home purchase.
Don't overspend on big-ticket items You may be itching to turn your new living room into a showplace, or celebrate your new dream home, but stay away from expensive purchases like furniture, cars, appliances, or vacations until closing. Your lender may send up red flags if you buy your appliances on your credit cards in the middle of your loan process. Since lending institutions are looking closely at your bank accounts, a large cash purchase is also a bad idea.
Don't get a new career. Your recent work history should show consistency. Getting a new career before you start the application process for a loan may not get in the way of your approval at all. However, if you switch careers before approval, your mortgage process could fail or be bogged down.
Don't switch banks or move finances around in your accounts. While the lender reviews your mortgage loan package, you will likely be asked to submit bank statements for the last two or three months for your checking accounts, savings accounts, money market funds and other liquid finances. To detect potential fraud, most lenders want a detailed paper trail to document the source of all cash. Even for innocent reasons, transferring finances or changing banks could make it more difficult for the lender to confirm your account history.
Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until closing, any good faith money actually belongs to you. Some sellers might not realize that any good faith funds must be used for your expenses upon closing. Find an attorney or other neutral party who will hang on to the deposit or place it in a trust account until you close. The contract should indicate who gets the deposit if the home purchase falls through.
VSI Home Lending can walk you through the pitfalls of getting a mortgage. Give us a call: (260) 338-2561.