Don't Trip Yourself up While Buying a New Home
What's more fun than getting a bunch of new furniture to adorn your future home? Nothing. But buying big ticket items before your loan closes can be a mistake. Keep in mind that until you get the keys, your lender is watching you very closely. Below you'll find a list of actions to avoid during this critical time of your home purchase.
Don't overspend on big-ticket items Although you may be dreaming of ways to turn your new house into a castle, try to stay away from major purchases like appliances, electronics, or furniture. You will also want to stay away from vacations and vehicle purchases until your loan closes. Your credit numbers could be altered suddenly if you purchase new furniture using credit cards. Since lending institutions are looking closely at your bank accounts, a large cash purchase is also not advised.
Don't go on a job search. Lenders look for a consistent career history on your paperwork. Changing jobs may not jeopardize your ability to qualify for a loan - particularly if you are getting a bigger paycheck. But for some, switching jobs during the loan application process might raise concern and hinder your approval.
Don't move finances around or change banks. Most lenders will ask for recent bank statements for your accounts: checking, savings, money market, and other assets. Your lending institution looks for a steady rise and fall of your money over the month, in the interest of avoiding fraud. Switching banks or transferring finances elsewhere - no matter the purpose - might make it harder for the lender to document your funds.
Don't deliver earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until the sale is complete, the good faith deposit actually belongs to you. The earnest money is to go toward your expenses closing; your FSBO seller may not know this. It's advisable to put the money into a trust account, or get a neutral party, like an attorney, to hold it until closing. If your home purchase fails, the purchase contract should dictate where your earnest money should go.
At Homewood Mortgage, Inc., we answer questions about this process every day. Call us at 205-941-1484.