What to Avoid During your Home Purchase
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What's more fun than buying a bunch of new stuff to go in your future home? Not much. But buying big ticket items before closing could be trouble. Until your keys are in hand, there still remain some hurdles to jump. Below you'll find a list of things to stay away from during this crucial time of your home purchase.
Don't overspend on big-ticket items You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new dream home, but keep away from big purchases like furniture, jewelry, appliances, or vacations until closing. 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. Using cash to purchase expensive items can even create a bad idea: many lending institutions look at your cash reserve when approving your mortgage.
Don't look for a new job. Your recent job history should show stability. Getting a new career before you start the application process for a mortgage may not jeopardize your approval at all. But for some, getting a new job during the loan application process might bring concern and stymie your application.
Don't take your accounts to a new bank or move around your finances. While the lending institution reviews your mortgage package, you will probably be required to provide bank statements for the last two or three months for your saving and checking accounts, money market accounts and other liquid assets. The lending institution looks for a consistent rise and fall of your money each month, in the interest of avoiding fraud. Switching banks or moving finances elsewhere - no matter the purpose - may hinder the documentation of your funds.
Don't give cash directly to your seller (commonly in cases of "for sale by owner") for earnest money. As a rule, your earnest money belongs to you, not to the seller up until the sale is final. Some FSBO sellers may not realize that the good faith funds must go toward your expenses upon closing. Get an attorney or other neutral party who can hold the funds or put them in a trust account until you close. The final disposition of earnest money, if your sale fails, should be indicated in the contract with your seller.
At Carolina Equity Services, Inc., we answer questions about this process every day. Give us a call at (919) 355-1034.