Don't Trip Yourself up While Buying a Home
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What's more fun than buying a bunch of new furnishings to adorn your future home? Not much. But making big purchases before your loan closes can be a misstep. There still remain a few major hurdles to jump before the house is really yours. Here are some actions to avoid before closing to be sure your transaction goes smoothly.
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, cars, appliances, or vacations until closing. Using plastic to buy new living room furniture could compromise your lending process by distorting your numbers. Since lenders are perusing your bank accounts, a large cash purchase is also not advised.
Don't get a new career. Lending Institutions like to see a consistent work history on your application. Finding a new job (particularly one with a bigger salary) may not affect your ability to qualify for your mortgage loan. However, switching careers in the middle of the loan process may affect your approval.
Don't switch your accounts to a new bank or move around your cash. Bank statements from the last few months for accounts in your name (savings, checking, money market, and other accounts) will be reviewed as the lending institution considers your application. In order to detect fraud, lenders want to see a clear and consistent picture of how you earn your living and where additional wealth comes from. Even for practical reasons, moving around money or changing banks might make it harder for the lender to verify your bank history.
Don't give funds directly to your seller (generally in the case of of "for sale by owner") to be used as earnest money. Your good faith money does not belong to the seller: it is actually yours until the transaction is final. The good faith money is to be used for your expenses upon closing; your FSBO seller might not understand this. Find an attorney or other neutral party who can hold the funds or place them in a trust account until you close. The final disposition of earnest funds, in the case of a failed transaction, should be specified in the contract with the seller.
Evans Mortgage Company can walk you through the pitfalls of getting a mortgage. Call us at 916-731-4405.