Things to Avoid While Purchasing a Home
What's better than getting a bunch of new furnishings to go in your future home? Not much. But making big purchases before your loan closes could be trouble. Until your keys are in hand, there are still some hoops to jump through. Here are some things to refrain from during the home buying process to assure your transaction goes smoothly.
Don't throw your money around. You may be itching to turn your new living room into a home magazine cover, or celebrate your new castle, but keep away from expensive purchases like furniture, jewelry, appliances, or vacations until closing. You may send up red flags with your lender if you finance new furniture on your credit cards during your loan process. Because lending institutions are examining your financial accounts, a large cash purchase is also a bad idea.
Don't go on a career search. Lending Institutions look for a consistent work history on your paperwork. Finding a new career (especially one with a bigger salary) may not hinder your ability to qualify for your mortgage loan. But for some people, changing careers during the loan approval process may raise concern and affect your approval.
Don't switch your accounts to a new bank or move around your cash. Bank statements from the last two or three months for accounts in your name (savings, checking, money market, and others) will probably be studied as the lending institution makes decisions regarding your mortgage application. The lender wants to see a steady flow of your funds over the pay period, in order to avoid fraud. No matter the purpose, moving banks or transferring money can raise a red flag with the lender and slow your approval process.
Don't deliver earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until closing, the earnest money remains yours. Some FSBO sellers may not know that the good faith money is to go toward your expenses upon closing. We recommend that you put the deposit into a trust account, or get an attorney to hold it until closing. If your transaction fails, your purchase agreement should indicate to whom this earnest money should go.
At Coastal Mortgage Corp., we answer questions about this process every day. Give us a call at 504-866-5626.
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