Don't Trip Yourself up While Buying a Home
What's better than buying a bunch of new furnishings to adorn your future home? Not much. But buying big ticket items before your loan closes could be trouble. There are still a few major hurdles to jump before the keys are handed over. 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 turn your new kitchen into a showplace, or celebrate your new dream home, but stay away from expensive purchases like furniture, cars, appliances, or vacations until the loan closes. You may send up red flags with your lender if you finance new appliances on your credit cards in the middle of your loan process. Using cash to purchase big-ticket items can also create an issue: many lending institutions take into consideration your cash on hand when approving your mortgage loan.
Don't go on a job search. Lenders feel comfortable seeing a consistent career history on your application forms. Changing jobs may not jeopardize your ability to qualify for a mortgage loan - especially if you are improving your salary. But in some cases, changing careers during the mortgage approval process could bring concern and hinder your application.
Don't change banks or move finances around in your bank accounts. Bank statements from the last few months for accounts in your name (savings, checking, money market, and others) will likely be studied as the lending institution makes decisions regarding your application. To eliminate fraud, lenders need a consistent portrayal of how you earn your living and where additional funds come from. Even for practical purposes, moving around funds or changing banks could make it difficult for your lender to verify your account history.
Don't give cash directly to your seller (usually in the case of of "for sale by owner") to be considered a "good faith" deposit. Your earnest money does not belong to the seller: it is actually yours until the sale closes. Your earnest money is to be applied to your expenses closing; some sellers might not understand this. It's advisable to put the funds into a trust account, or get an attorney to hold them until the closing of the sale. If your sale falls through, the purchase agreement should indicate to whom your earnest money should go.
America's Money Source can walk you through the pitfalls of getting a mortgage. Give us a call at (407) 898-7559.
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