Don't Trip Yourself up While Buying a New Home
What's better than getting a bunch of new stuff to go in your future home? Nothing. But making big ticket purchases before closing could be trouble. Until your keys are in hand, there are still some hurdles to jump. Below you'll find a list of actions to stay away from during this critical 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 big ticket purchases like appliances, electronics, or furniture. We also recommend that you stay away from vacations and vehicle purchases until the closing of your loan. Using plastic to buy new living room furniture could compromise your lending process by distorting your numbers. Since lending institutions are looking closely at your bank accounts, a large cash purchase is also a mistake.
Don't go on a career search. Lenders like to see a consistent work history on your application. Changing jobs may not affect your ability to qualify for a mortgage loan - especially if you are getting a better salary. But for some, switching jobs during the loan approval process could raise concern and stymie your application.
Don't switch banks or move money around in your accounts. Bank statements from the last few months for all of your accounts (checking, savings, money market, and other accounts) will be studied as the lending institution makes decisions regarding your application. To avoid potential fraud, most lenders want detailed paperwork to document the source of all funds. Switching banks or moving money to another account - for whatever reason - might hinder the documentation of your funds.
Don't deliver earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your good faith deposit does not belong to the seller: it remains yours until the transaction is final. Your good faith money is to be used for your expenses upon closing; the FSBO seller may not realize this. An attorney or other type of neutral party can hold onto your earnest money, or you may put it temporarily into a trust account until you close. Should your home purchase fail, your contract with the seller should document where this earnest money should go.
At Tenby J. Dahman, we answer questions about this process every day. Give us a call: 3038627760.