Don't Trip Yourself up While Buying a Home
What's more fun than buying a bunch of new furnishings to adorn your future home? Nothing. But making big purchases before closing could be trouble. There still remain a few major hurdles to jump before your loan closes. Here are some actions to refrain from during the home buying process to be sure your transaction goes smoothly.
Don't buy luxury items. You may be itching to turn your new kitchen into a showplace, or celebrate your new castle, but keep away from big purchases like furniture, jewelry, appliances, or vacations until the loan closes. Your lender may send up red flags if you finance your electronics on your credit cards during your loan process. Using cash to purchase big-ticket items can even be an issue: most banks look at your available cash when approving your loan.
Don't look for a new job. Your recent work history should show stability. Finding a new job (particularly one with a bump in salary) may not jeopardize your ability to qualify for your mortgage loan. However, switching jobs in the middle of your approval process could affect whether or not you are approved.
Don't switch your accounts to a new bank or move around your cash. While the lender reviews your mortgage loan application, you will likely be required to produce bank statements for the last few months for your saving and checking accounts, money market funds and other liquid assets. To detect potential fraud, most lending institutions want detailed paperwork to verify the source of all incoming funds. No matter the reason, moving banks or moving money from one account to another may raise a red flag with the lender and slow down your application process.
Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your earnest money does not belong to the seller: it remains yours until closing. The good faith funds are to be applied to your expenses upon closing; some FSBO sellers might not know this. It's best to put the money into a trust account, or get a neutral party, like a lawyer, to hold it until closing. If your home purchase fails, your contract with the seller should document where your earnest money should go.
Nationwide Home Loans can walk you through the pitfalls of getting a mortgage. Call us: 5626935048.