Things to Avoid While Purchasing a New Home
What's better than getting a bunch of new stuff to adorn your future home? Not much. But making big purchases before your loan closes can be an error. Keep in mind that until closing, your lender is watching your finances very closely. Below you'll find a list of things to avoid during this crucial time of your home purchase.
Don't make expensive purchases. You may be itching to turn your new living room into a showplace, or celebrate your new castle, but keep away from expensive purchases like furniture, jewelry, appliances, or vacations until your loan closes. Using plastic to buy new living room furniture could jeopardize your lending process by altering your numbers dramatically. 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 look for a new career. Consistency in your career history is a good thing to banks and other lenders. Finding a new career (particularly one with a better paycheck) may not affect your ability to qualify for a loan. But for some, getting a new job during the mortgage application process may bring concern and hinder your approval.
Don't switch your accounts to a new bank or move around your cash. Your lending institution will instruct the submission of recent bank statements of your accounts: checking, savings, money market, and other liquid assets. In order to avoid fraud, lenders need a consistent portrayal of how you earn your living and where additional wealth comes from. Changing banks or transferring finances elsewhere - for whatever reason - might hinder the review of your funds.
Don't give funds directly to your seller (commonly in the case of of "for sale by owner") for earnest money. Your good faith deposit does not belong to the seller: it is actually yours until the sale closes. Your good faith funds are to be applied to your expenses closing; some sellers may not realize this. Find an attorney or other neutral person who will hang on to the funds or place them in a trust account until closing. If your sale falls through, your purchase agreement should dictate where the good faith funds should go.
Coastal Mortgage Corp. can answer questions about these "Don'ts" and many others. Call us: 504-866-5626.
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