Don't Trip Yourself up While Buying your Home
What's better than buying a bunch of new stuff to go in your future home? Nothing. But making big purchases before closing can be harmful. There still remain a few major hurdles to jump before closing. Here are some actions to avoid before closing to assure the transaction goes well.
Don't buy luxury items. You may be itching to turn your new kitchen into a showplace, or celebrate your new dream home, but keep away from major purchases like furniture, cars, appliances, or vacations until closing. Using credit cards to buy furniture could jeopardize your lending process by distorting your numbers. It's even a bad idea to make those big purchases using cash. Lenders are examining your cash on hand when considering your loan.
Don't get a new career. Your recent work history should show consistency. Changing jobs may not jeopardize your ability to qualify for a mortgage loan - particularly if you are improving your salary. But for some people, switching jobs during the loan approval process could bring concern and stymie your approval.
Don't move cash around or change banks. Bank statements from the last two or three months for accounts in your name (savings, checking, money market, and other accounts) will likely be reviewed as the lender considers your application. In order to detect fraud, lenders need clear documentation of how you earn your money and where additional money comes from. Changing banks or moving money to another account - no matter the reason - might make it difficult for your lender to verify 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 is actually yours until closing. Your seller might not realize that any earnest money is to go toward your expenses upon closing. Get a lawyer or other neutral party who can hang on to the deposit or place it in a trust account until you close. The contract should indicate who keeps the deposit if the home purchase does not go through.
Tenby J. Dahman can answer questions about these "Don'ts" and many others. Call us at 3038627760.