Don't Trip Yourself up While Buying your New Home
What's better than buying a bunch of new furniture to adorn your future home? Nothing. But making big ticket purchases before closing can be an error. Until the keys are handed over, there still remain some hoops to jump through. We have given you a list of actions below we suggest you avoid when waiting for your loan to close.
Don't make expensive purchases. Although you will be listing ways to turn your new house into a castle, try to stay away from major purchases like appliances, electronics, or furniture. We also recommend that you avoid vacations and car purchases until your loan closes. Using credit cards to buy furniture could jeopardize your lending process by distorting your numbers. Because lending institutions are looking closely at your financial accounts, a large cash purchase is also a mistake.
Don't get a new job. Lending Institutions feel comfortable seeing a consistent work history on your application. Getting a new job may not affect your ability to qualify for a mortgage loan - particularly if you are getting a bigger paycheck. However, if you switch careers before approval, your process could fail or be bogged down.
Don't change banks or move cash around in your bank accounts. Your lender will ask for recent bank statements of all of your accounts: checking, savings, money market, and other liquid assets. In order to detect fraud, lenders require a clear and consistent picture of how you earn your money and where additional wealth comes from. Even for innocent purposes, moving around cash or switching banks may make it more difficult for the lender to verify your account history.
Don't give cash directly to your seller (usually in cases of "for sale by owner") to be considered earnest money. Until closing, the earnest money remains yours. Your FSBO seller may not realize that your good faith funds must be applied to your expenses upon closing. Find a lawyer or other neutral person who will hang on to the funds or place them in a trust account until you close. The disposition of good faith money, if your transaction fails, should be indicated in the contract with the seller.
MidTowne Mortgage can answer questions about these "Don'ts" and many others. Give us a call: (478) 746-2063.