Don't Trip Yourself up While Buying a New Home
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What's more fun than getting a bunch of new furniture to adorn your future home? Not much. But making big ticket purchases before closing could be trouble. Until closing, there are still some hurdles to jump. Here are some things to avoid before closing to be sure the transaction goes well.
Don't make expensive purchases. You may be itching to order that new Turkish rug for the soon-to-be-yours living room, but it's advisable to avoid making large buys like furniture, appliances, jewelry, or vacations until your home loan closes. Your lender may send up red flags if you finance your electronics on your credit cards during your loan process. It's also a red flag to make those large purchases with cash. Lenders are examining your available cash when considering your loan.
Don't go on a job search. Lending Institutions like to see a consistent career history on your application. Finding a new career (particularly one with a better salary) may not hinder your ability to qualify for a loan. However, if you switch careers before approval, your loan process could fail or be stalled.
Don't switch your accounts to a new bank or move around your cash. As your lending institution reviews your mortgage package, you will likely be required to provide bank statements for the last few months on your saving and checking accounts, money market funds and other liquid finances. To avoid potential fraud, most loans require a detailed paper trail to determine the source of all cash. No matter the reason, moving banks or transferring funds may raise a red flag with your lender and slow down your application process.
Don't deliver 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 remains yours until the sale closes. Although your seller might not realize this, the earnest money should go toward the buyer's closing expenses. A neutral party, like an attorney can hold onto your earnest money, or you may put it temporarily into a trust account until closing. Your purchase contract should dictate who gets the deposit if the home purchase falls through.
Tania L. Maples can walk you through the pitfalls of getting a mortgage. Give us a call: 810-844-2224.