Don't Trip Yourself up While Buying a Home
With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the mistake of taking their enthusiasm straight to the mall or appliance store. Until the house is really yours, there are still some hoops to jump through. Here are some things to stay clear of before closing to be sure your transaction goes well.
Don't buy big-ticket items. Although you will be listing ways to turn your new house into a castle, avoid big ticket purchases like appliances, electronics, or furniture. You will also want to stay away from vacations and car purchases until your loan closes. Using credit cards to buy new living room furniture could jeopardize your loan process by distorting your numbers. Using cash to purchase big items can even be a bad idea: many lenders take into consideration your cash on hand when approving your loan.
Don't go on a job search. Stability in your work history is a positive thing to lenders. Changing jobs may not jeopardize your ability to qualify for a mortgage loan - particularly if you are improving your salary. But for some, switching jobs during the mortgage loan approval process may bring concern and affect your application.
Don't move cash around or switch banks. As the lending institution considers your mortgage package, you will likely be asked to produce bank statements for the last few months for your saving and checking accounts, money market accounts and other liquid wealth. The lender is looking for a consistent rise and fall of your funds each month, in the interest of ruling out fraud. No matter the purpose, switching banks or transferring funds may raise a red flag with the lender and slow your approval process.
Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. Your good faith money does not belong to the seller: it remains yours until the transaction is final. Your seller may not realize that this earnest money should be used for your expenses upon closing. Find an attorney or other neutral person who will hold the deposit or put it in a trust account until closing. The final disposition of earnest funds, in the case of a failed transaction, should be documented in the purchase agreement with the seller.
Tenby J. Dahman can answer questions about these "Don'ts" and many others. Call us at 3038627760.