Things to Avoid While Buying a Home
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What's more fun than buying a bunch of new stuff to go in your future home? Nothing. But making big purchases before closing could be trouble. It's wise to remember that until closing, your lender is watching your accounts very closely. We have listed some things below we suggest you stay away from when waiting for your loan to close.
Don't overspend on big-ticket items Although you may be dreaming of ways to turn your new home into a castle, avoid big ticket purchases like appliances, electronics, or furniture. You will also want to avoid vacations and car purchases until your loan closes. Financing new stainless steel appliances with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. It's also a mistake to make those huge purchases with cash. Lenders are looking at your available cash when considering your loan.
Don't get a new career. Lending Institutions feel comfortable seeing a consistent work history on your application forms. Finding a new job (especially one with a bump in salary) may not jeopardize your ability to qualify for a mortgage. However, if you switch careers before approval, your process could fail or be slowed down.
Don't take your accounts to a new bank or move around your cash. Bank statements from recent months for all of your accounts (checking, savings, money market, and other assets) will probably be reviewed as the lender makes decisions regarding your application. To detect potential fraud, most loans require a detailed paper trail to determine the source of all incoming funds. No matter the purpose, switching banks or transferring money may raise a red flag with your lender and slow down your approval process.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, delivered to his door. Your earnest money does not belong to the seller: it remains yours until closing. Your seller might not know that this earnest money must go toward your expenses upon closing. A neutral party, like an attorney can hold your earnest money, or you may put it temporarily into a trust account until you close. The disposition of good faith money, if your sale falls through, should be specified in the contract with your seller.
Integrity Mortgage Center LLC can answer questions about these "Don'ts" and many others. Give us a call at 601-304-5670.