What to Avoid During a Home Purchase
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What's more fun than getting a bunch of new furniture to go in your future home? Nothing. But making large purchases before closing could be trouble. Until the keys are handed over, there still remain some hoops to jump through. Below you'll find a list of things to avoid during this crucial time of your home purchase.
Don't make expensive purchases. Although you will be listing ways to turn your new house into a castle, avoid major purchases like appliances, electronics, or furniture. We also recommend that you avoid vacations and car purchases until your loan closes. Using credit cards to buy furniture could jeopardize your loan process by changing your numbers dramatically. It's even a red flag to make those big purchases with cash. Lenders are examining your cash reserve when considering your loan.
Don't get a new career. Lenders look for a consistent job history on your application forms. Getting a new job before you start the application process for a mortgage may not get in the way of your approval at all. However, finding a new job in the middle of the approval process may influence your approval.
Don't switch banks or move finances around in your bank accounts. Bank statements from the last two or three months for all of your accounts (savings, checking, money market, and other accounts) will be reviewed as the lending institution makes decisions regarding your mortgage application. Your lender hopes to see a steady flow of your funds over the month, in the interest of avoiding fraud. No matter the purpose, moving banks or moving funds from one account to another could raise a red flag with the lender and slow down your approval process.
Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. Until the completion of the deal, the good faith deposit actually belongs to you. Although some FSBO sellers may not realize this, the good faith money must go toward your closing expenses. Find a lawyer or other neutral party who can hold the money or place it in a trust account until you close. The contract should document who keeps the earnest funds if the transaction falls through.
At Augusta Mortgage Solutions, we answer questions about this process every day. Give us a call at 706-860-5514.