What to Avoid During your Home Purchase
What's more fun than getting a bunch of new furnishings to adorn your future home? Nothing. But buying big ticket items before your loan closes can be harmful. Keep in mind that until your keys are in hand, your lender is watching your finances very closely. Below you'll find a list of things to stay away from during this critical time of your home purchase.
Don't make expensive purchases. You may be itching to turn your new living room into a home magazine cover, or celebrate your new dream home, but stay away from expensive purchases like furniture, jewelry, appliances, or vacations until your loan closes. Using credit cards to buy furniture could compromise your loan process by distorting your numbers. It's even a bad idea to make those large purchases using cash. Lenders are looking at your cash reserve when considering your loan.
Don't get a new job. Your recent career history should show consistency. Getting a new job before you start the application process for a mortgage may not jeopardize your approval at all. But for some, changing jobs during the loan approval process may raise concern and stymie your application.
Don't move money around or switch banks. Bank statements from the last few months for accounts in your name (savings, checking, money market, and others) will probably be studied as the lender considers your mortgage application. To detect potential fraud, most lenders require detailed paperwork to document the source of all cash. Switching banks or moving funds elsewhere - no matter the purpose - might make it difficult for the lender to verify your funds.
Don't give funds directly to your seller (usually in cases of "for sale by owner") to be considered a "good faith" deposit. As a rule, your earnest money belongs to you, not the seller until the deal closes. Some sellers might not know that this earnest money must go toward your expenses upon closing. Find a lawyer or other neutral party who is able to hang on to the deposit or put it in a trust account until you close. Your contract should document to whom the deposit goes if the home purchase fails.
VSI Home Lending can answer questions about these "Don'ts" and many others. Call us at 2603382561.