Don't Trip Yourself up While Buying a New Home
With the thrill that comes with an accepted offer and a "yes" from the lender, some homebuyers make the error of taking their enthusiasm straight to the mall or furniture store. There are still a few major hurdles to jump before closing. We have listed some things below you will want to stay away from when waiting for your loan to close.
Don't buy big-ticket items. You may be itching to turn your new living room into a home magazine cover, or celebrate your new dream home, but stay away from big purchases like furniture, jewelry, appliances, or vacations until closing. You may send up red flags with your lender if you buy your furniture on your credit cards in the middle of your loan process. It's even a red flag to make those big purchases with cash. Lenders are looking at your cash on hand when considering your loan.
Don't go on a career search. Your recent career history should show stability. Finding a new job (particularly one with a better paycheck) may not hinder your ability to qualify for a mortgage. However, if you switch careers before your loan is approved, your mortgage process could fail or be slowed down.
Don't change banks or move cash around in your accounts. As your lender considers your mortgage loan application, you will probably be asked to provide bank statements for recent months on your checking accounts, savings accounts, money market funds and other liquid finances. To eliminate potential fraud, most lending institutions need thorough paperwork to determine the source of all funds. Even for practical reasons, moving around funds or switching banks may make it more difficult for the lender to confirm your bank history.
Don't give cash directly to your seller (usually in the case of of "for sale by owner") to be considered earnest money. Until the sale is complete, the good faith deposit actually belongs to you. Any good faith money is to go toward your expenses closing; some sellers might not know this. A neutral party, like an attorney can hold onto your funds, or you may put them temporarily into a trust account until you close. Your contract should dictate who gets the money if the home purchase does not go through.
Tenby J. Dahman can walk you through the pitfalls of getting a mortgage. Call us at 3038627760.