Don't Trip Yourself up While Buying a Home
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, many homebuyers make the mistake of carrying their enthusiasm straight to the mall or appliance store. It's best to remember that until closing, your lender is watching you very closely. Below you'll find a list of things to avoid during this crucial time of your home purchase.
Don't buy big-ticket items. Although you may be listing ways to turn your new home into a castle, try to stay away from big ticket purchases like appliances, electronics, or furniture. You will also want to avoid vacations and car purchases until the closing of your loan. Financing new Plasma TVs 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 buy expensive items can even be a problem: most lenders look at your available cash when approving your application.
Don't go on a job search. Your recent work history should show stability. Finding a new career (particularly one with a better salary) may not affect your ability to qualify for a mortgage loan. However, getting a new job in the middle of the approval process may affect your approval.
Don't switch banks or move finances around in your bank accounts. Your lending institution will require you to produce recent bank statements for all of your accounts: savings, checking, money market, and other liquid assets. In order to avoid fraud, lenders require a consistent portrayal of how you earn your living and where additional wealth comes from. Switching banks or transferring finances to another account - no matter the purpose - might make it harder for your lender to review your funds.
Don't give a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Your good faith deposit does not belong to the seller: it is actually yours until the transaction is final. Your FSBO seller might not realize that any good faith funds is to go toward your expenses upon closing. It's advisable to put the funds into a trust account, or get an attorney to hold them until closing. Should your home purchase fail, the purchase agreement should document to whom your good faith funds should go.
At Tenby J. Dahman, we answer questions about this process every day. Call us: 3038627760.