Don't Trip Yourself up While Buying your Home
Many new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller says "yes" and the loan is approved. There still remain a few major hurdles to jump before closing. Here are some things to stay clear of before closing to assure the transaction goes smoothly.
Don't throw your money around. You may be itching to turn your new living room into a home magazine cover, or celebrate your new dream home, but keep away from big purchases like furniture, cars, appliances, or vacations until your loan closes. Your credit numbers could change suddenly if you purchase new furniture using credit cards. Because lending institutions are reviewing your financial accounts, a large cash purchase is also a bad idea.
Don't go on a job search. Stability in your career history is a good thing to lenders. Getting a new job may not affect your ability to qualify for a loan - especially if you are getting a bigger paycheck. However, switching jobs during your loan process might influence whether or not you are approved.
Don't switch your accounts to a new bank or move around your cash. Your lending institution will require you to provide recent bank statements of your accounts: checking, savings, money market, and other liquid assets. To detect potential fraud, most lenders want detailed paperwork to verify the source of all funds. No matter the reason, moving banks or moving funds from one account to another may raise a red flag with the lender and impede your approval process.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. Until closing, any good faith deposit actually belongs to you. Although some FSBO sellers may not know this, the earnest money must be applied to your closing expenses. An attorney or other type of neutral party can hang onto your deposit, or you may put it temporarily into a trust account until closing. The final disposition of earnest funds, in the case of a failed transaction, should be included in the purchase agreement with the seller.
At Tenby J. Dahman, we answer questions about this process every day. Give us a call: 3038627760.