Don't Trip Yourself up While Buying a Home
What's better than getting a bunch of new furniture to adorn your future home? Nothing. But making large purchases before closing could be trouble. There still remain a few major hurdles to jump before the keys are handed over. We have given you a list of things below you will want to avoid when waiting for closing.
Don't throw your money around. Although you may be planning ways to turn your new home into a castle, avoid big ticket purchases like appliances, electronics, or furniture. We also recommend that you stay away from vacations and car purchases until your loan closes. Using credit cards to buy new living room furniture could jeopardize your lending process by distorting your numbers. It's even a bad idea to make those large purchases with cash. Lenders are looking at your available cash when considering your loan.
Don't look for a new job. Consistency in your work history is a positive thing to lenders. Getting a new job before you start the application process for a loan may not compromise your approval at all. However, finding a new career in the middle of your application process may affect whether or not you are approved.
Don't move finances around or change banks. While your lender reviews your mortgage application, you will probably be instructed to provide bank statements for the last two or three months for your saving and checking accounts, money market funds and other liquid wealth. To eliminate potential fraud, most lending institutions want thorough paperwork to verify the source of all cash. No matter the purpose, switching banks or transferring funds could raise a red flag with the lender and slow down your application process.
Don't give money directly to your seller (usually in the case of of "for sale by owner") to be considered earnest money. Your earnest money does not belong to the seller: it remains yours until the sale closes. Some sellers might not realize that the good faith funds should go toward your expenses upon closing. You'll need to put the money into a trust account, or get a neutral party, like an attorney, to hold it until the closing of the sale. The final disposition of good faith funds, in the case of a failed transaction, should be included in the purchase agreement with the seller.
U.S.A. Lending, Inc. can answer questions about these "Don'ts" and many others. Call us at 305-967-7200.