Don't Trip Yourself up While Buying a Home
Many new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller says "yes" and the loan is approved. Until your loan closes, there still remain some hoops to jump through. Below you'll find a list of actions to stay away from during this critical time of your home purchase.
Don't buy luxury items. You may be tempted to buy that new Turkish rug for the soon-to-be-yours living room, but it's advisable to stay away from making large purchases like furniture, appliances, jewelry, or vacations until closing. You may send up red flags with your lender if you finance your appliances on your credit cards during your loan process. It's even a bad idea to make those huge purchases with cash. Lenders are examining your cash on hand when considering your loan.
Don't get a new career. Your recent job history should show stability. Getting a new career before you start the application process for a mortgage loan may not affect your approval at all. However, if you switch careers before you qualify, your mortgage process could fail or be slowed down.
Don't change banks or move cash around in your bank accounts. Most lenders will ask for recent bank statements for accounts in your name: savings, checking, money market, and other assets. To avoid potential fraud, most lending institutions require a thorough paper trail to determine the source of all incoming funds. Changing banks or moving funds elsewhere - for whatever purpose - may hinder the review of your funds.
Don't give money directly to your seller (generally in cases of "for sale by owner") to be used as earnest money. As a rule, your good faith deposit belongs to you, not the seller until closing. Although your seller may not know this, any good faith funds should go toward the buyer's closing expenses. An attorney or other type of neutral party can hang onto your funds, or you may put them temporarily into a trust account until closing. The final disposition of earnest funds, if your transaction fails, should be documented in the contract with the seller.
America's Money Source can answer questions about these "Don'ts" and many others. Give us a call: (407) 898-7559.
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