Don't Trip Yourself up While Buying a New Home
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What's better than buying a bunch of new furniture to adorn your future home? Not much. But making large purchases before your loan closes could be trouble. Until your keys are in hand, there still remain some hoops to jump through. Below you'll find a list of actions to avoid during this critical time of your home purchase.
Don't empty your wallet on big-ticket items You may be itching to buy that new sofa for the soon-to-be-yours living room, but it's advisable to stay away from making large purchases like furniture, appliances, electronic equipment, or cars until your home loan closes. You may send up red flags with your lender if you finance new electronics on your credit cards in the middle of your loan process. Using cash to purchase expensive items can even create a bad idea: most lenders take into consideration your available cash when approving your mortgage loan.
Don't go on a job hunt. Your recent career history should show stability. Finding a new job (particularly one with a better salary) may not hinder your ability to qualify for a loan. However, if you switch careers before you qualify, your process could fail or be stalled.
Don't move money around or switch banks. Your lender will instruct the submission of recent bank statements on all of your accounts: savings, checking, money market, and other liquid assets. To detect fraud, lenders want to see clear documentation of how you earn your money and where additional wealth comes from. No matter the purpose, changing banks or transferring funds can raise a red flag with the lender and slow down your approval process.
Don't give money directly to your seller (commonly in the case of of "for sale by owner") for a "good faith" deposit. Until the completion of the deal, any good faith money actually belongs to you. The FSBO seller might not know that any good faith funds must be applied to your expenses upon closing. Get a lawyer or other neutral party who is able to hold the money or put it in a trust account until you close. The final disposition of earnest funds, if your home purchase falls through, should be documented in the contract with the seller.
Metro Mortgage can walk you through the pitfalls of getting a mortgage. Give us a call: 866-300-1550.