Don't Trip Yourself up While Buying a Home
Some new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller accepts their offer and the lender approves their loan. Until closing, there still remain some hoops to jump through. Here are some things to stay clear of during the home buying process to be sure the transaction goes smoothly.
Don't buy big-ticket items. You may be itching to turn your new living room into a showplace, or celebrate your new castle, but stay away from major purchases like furniture, jewelry, appliances, or vacations until the loan closes. Your lender may send up red flags if you purchase new furniture on your credit cards in the middle of your loan process. Using cash to purchase big-ticket items can also create a problem: most banks take into consideration your cash on hand when approving your mortgage loan.
Don't look for a new career. Consistency in your career history is a good thing to lenders. Changing jobs may not jeopardize your ability to qualify for a loan - especially if you are going to be making more money. However, getting a new job in the middle of your application process may affect your approval.
Don't switch banks or move cash around in your bank accounts. Your lender will ask for recent bank statements for all of your accounts: savings, checking, money market, and other assets. To detect fraud, lenders want to see a clear and consistent picture of how you earn your money and where additional wealth comes from. Changing banks or transferring money elsewhere - no matter the reason - may hinder the documentation of your funds.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. Until the sale is complete, the good faith deposit remains yours. Any earnest funds are to be applied to your expenses closing; some sellers may not realize this. An attorney or other type of neutral party can hold your funds, or you may put them temporarily into a trust account until you close. The disposition of earnest funds, if your home purchase falls through, should be included in the purchase agreement with the seller.
At U.S.A. Lending, Inc., we answer questions about this process every day. Give us a call: 305-967-7200.