What to Avoid During your Home Purchase
What's better than buying a bunch of new furniture to adorn your future home? Not much. But making big purchases before your loan closes can be an error. It's wise to remember that until your keys are in hand, your lender is watching your finances very closely. Here are some things to refrain from before closing to be sure your transaction goes smoothly.
Don't overspend on big-ticket items Although you may be dreaming of ways to turn your new home into a showplace, avoid major purchases like appliances, electronics, or expensive furnishings. We also recommend that you avoid vacations and car purchases until your loan closes. Your lender may send up red flags if you buy your furniture on your credit cards in the middle of your loan process. Using cash to buy big items can even be a mistake: most lenders take into consideration your available cash when approving your loan.
Don't look for a new career. Lending Institutions look for a consistent career history on your paperwork. Changing jobs may not affect your ability to qualify for a mortgage loan - especially if you are improving your salary. However, switching jobs in the middle of your application process could influence whether or not you are approved.
Don't change banks or move cash around in your accounts. Bank statements from recent months for accounts in your name (savings, checking, money market, and other assets) will probably be analyzed as the lender considers your loan application. The lender looks for a steady rise and fall of your funds each pay period, in order to rule out fraud. Switching banks or moving finances elsewhere - even if its just to pool funds - may make it difficult for the lender to review your funds.
Don't give money directly to your seller (usually in cases of "for sale by owner") for earnest money. Until the completion of the deal, the good faith deposit remains yours. Although your seller may not know this, your earnest money should go toward the buyer's closing expenses. We recommend that you put the deposit into a trust account, or get an attorney to hold it until the closing of the sale. The disposition of good faith funds, in the case of a failed transaction, should be included in the contract with your seller.
At Hawk Mortgage Group, we answer questions about this process every day. Call us at (443) 619-7900.