Don't Trip Yourself up While Buying your Home
Many new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller accepts their offer and the loan is approved. Until your loan closes, there are still some hurdles to jump. Here are some actions to avoid before closing to be sure the transaction goes smoothly.
Don't empty your wallet on big-ticket items You may be itching to buy that new easy-chair for the soon-to-be-yours living room, but it's best to avoid making major buys like furniture, appliances, jewelry, or vacations until your home loan closes. Your credit numbers could be altered suddenly if you purchase new furniture using credit cards. Using cash to purchase expensive items can also be a bad idea: many banks look at your cash on hand when approving your loan.
Don't look for a new job. Lending Institutions feel comfortable seeing a consistent career history on your application. Getting a new job before you start the application process for a mortgage loan may not get in the way of your approval at all. However, if you switch careers before you qualify, your process could fail or be stalled.
Don't move cash around or change banks. Your lending institution will instruct the submission of recent bank statements on all of your accounts: checking, savings, money market, and other assets. The lender looks for a steady rise and fall of your money each pay period, in the interest of avoiding fraud. Even for practical reasons, transferring finances or changing banks might make it difficult for your lending institution to confirm your bank history.
Don't give money directly to your seller (commonly in cases of "for sale by owner") for earnest money. As a rule, your earnest money belongs to you, not the seller up until the deal closes. Although some FSBO sellers might not understand this, your good faith funds must go toward your closing expenses. Find an attorney or other neutral person who will hang on to the money or place it in a trust account until you close. The contract should document who gets the earnest funds if the home purchase falls through.
At America's Money Source, we answer questions about this process every day. Give us a call: (407) 898-7559.
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