Don't Trip Yourself up While Buying your New Home
Some new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller accepts their offer and the lender approves the loan. Keep in mind that until closing, your lender is watching your finances very closely. Below you'll find a list of things to stay away from during this crucial time of your home purchase.
Don't buy big-ticket items. You may be itching to turn your new living room into a showplace, or celebrate your new dream home, but stay away from big purchases like furniture, jewelry, appliances, or vacations until closing. Using plastic to buy furniture could jeopardize your loan process by distorting your numbers. It's also a red flag to make those large purchases with cash. Lending Institutions are looking at your available cash when considering your loan.
Don't look for a new career. Lenders like to see a consistent job history on your application forms. Changing jobs may not jeopardize your ability to qualify for a loan - especially if you are getting a bigger paycheck. However, if you switch careers before your loan is approved, your process could fail or be slowed down.
Don't switch your accounts to a new bank or move around your money. Bank statements from recent months for accounts in your name (savings, checking, money market, and other assets) will be studied as the lender considers your application. To avoid potential fraud, most loans want a thorough paper trail to document the source of all incoming funds. No matter the purpose, changing banks or moving money from one account to another may raise a red flag with the lender and slow your application process.
Don't deliver earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith deposit belongs to you, not the seller until closing. Some FSBO sellers may not know that these good faith funds should be used for your expenses at closing. You'll want to put the funds into a trust account, or get a neutral person, like an attorney to hold them until the deal closes. The purchase contract should indicate who gets the earnest funds if the transaction falls through.
At 1st Credential Mortgage Inc, we answer questions about this process every day. Call us: (281) 778-0805.