Don't Trip Yourself up While Buying your Home
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the error of taking their enthusiasm straight to the mall or appliance store. Until your loan closes, there still remain some hoops to jump through. Below you'll find a list of actions to avoid during this crucial time of your home purchase.
Don't overspend on big-ticket items You may be tempted to buy that new couch for the soon-to-be-yours den, but it's best to avoid making large purchases like furniture, appliances, electronic equipment, or vacations until your home loan closes. You may send up red flags with your lender if you purchase new furniture on your credit cards during your loan process. Using cash to buy big-ticket items can also create a bad idea: most lenders look at your cash reserve when approving your mortgage.
Don't go on a job search. Lenders feel comfortable seeing a consistent career history on your paperwork. Getting a new career before you apply for a mortgage loan may not compromise your approval at all. However, if you switch careers before approval, your loan process could fail or be stalled.
Don't move money around or change banks. Bank statements from the last two or three months for accounts in your name (checking, savings, money market, and others) will be reviewed as the lender considers your application. To avoid potential fraud, most lending institutions want detailed paperwork to determine the source of all cash. Changing banks or transferring finances elsewhere - even if its only to consolidate funds - may hinder the documentation of your funds.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. As a rule, your good faith deposit is yours, not the seller's until the deal closes. Your seller might not realize that the good faith funds should go toward your expenses at closing. Find a lawyer or other neutral person who can hang on to the funds or place them in a trust account until closing. Should your home purchase fail, the purchase contract should specify where your earnest money should go.
MidTowne Mortgage can walk you through the pitfalls of getting a mortgage. Call us at (478) 746-2063.