Things Not to Do Before Purchasing a Home
No Major Purchase of Any Kind
It’s best not to make any major purchases that would create debt of any
kind. This includes furniture, appliances, electronic equipment,
jewelry, vacations, expensive weddings and automobiles, of course.
Don’t Move Money Around
When a lender reviews your loan package for approval, one of the things
they are concerned about is the source of funds for your down payment
and closing costs. Most likely, you will be asked to provide statements
for the last two or three months on any of your liquid assets. This
includes checking accounts, savings accounts, money market funds,
certificates of deposit, stock statements, mutual funds, and even your
company 401K and retirement accounts.
If you have been moving money between accounts during that time, there may be large deposits and withdrawals in some of them.
The mortgage underwriter (the person who actually approves your loan) will probably require a complete paper trail of all the withdrawals and deposits. You may be required to produce cancelled checks, deposit receipts, and other seemingly inconsequential data, which could get quite tedious.
Perhaps you become exasperated at your lender, but they are only doing
their job correctly. To ensure quality control and eliminate potential
fraud, it is a requirement on most loans to completely document the
source of all funds. Moving your money around, even if you are
consolidating your funds to make it "easier," could make it more
difficult for the lender to properly document.
So leave your money where it is until you talk to a loan officer.
Oh…and most importantly, don’t change financial institutions. The longer the amount of time that you can show where your money has been, the better off you will be.
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