Don't Trip Yourself up While Buying a Home
What's more fun than getting a bunch of new stuff to go in your future home? Nothing. But making big purchases before closing could be trouble. Keep in mind that until you get the keys, your lender is watching your finances very closely. Here are some actions to refrain from before closing to assure the transaction goes smoothly.
Don't make expensive purchases. You may be itching to turn your new living room into a home magazine cover, or celebrate your new castle, but keep away from big purchases like furniture, jewelry, appliances, or vacations until your loan closes. Your lender may send up red flags if you buy your appliances on your credit cards in the middle of your loan process. Since lenders are examining your financial accounts, a large cash purchase is also not advised.
Don't go on a job search. Your recent work history should show consistency. Finding a new career (particularly one with a bigger salary) may not jeopardize your ability to qualify for a loan. However, switching careers in the middle of your loan process may influence whether or not you are approved.
Don't move cash around or switch banks. While your lending institution considers your loan application, you will probably be required to submit bank statements for the last few months on your checking accounts, savings accounts, money market accounts and other liquid assets. In order to eliminate fraud, lenders want to see clear documentation of how you earn your money and where any additional wealth comes from. Even for innocent purposes, transferring finances or switching banks could make it more difficult for your lending institution to document your account history.
Don't give a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Until closing, any good faith deposit remains yours. The good faith money is to be used for your expenses closing; some sellers might not know this. An attorney or other type of neutral party can hang onto your deposit, or you may put it temporarily into a trust account until you close. The contract should specify who keeps the earnest funds if the transaction falls through.
The Mortgage Firm - Team Meyers can answer questions about these "Don'ts" and many others. Give us a call: (407) 889-4321.