Don't Trip Yourself up While Buying your New Home
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What's more fun than buying a bunch of new furniture to go in your future home? Nothing. But buying big ticket items before closing could be trouble. There are still a few major hurdles to jump before your loan closes. Here are some actions to avoid during the home buying process to be sure your transaction goes well.
Don't empty your wallet on big-ticket items Although you may be planning ways to turn your new home into a castle, avoid big ticket purchases like appliances, electronics, or expensive furnishings. You will also want to avoid vacations and vehicle purchases until the closing of your loan. Financing new Plasma TVs with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. Because lenders are examining your bank accounts, a large cash purchase is also not advised.
Don't look for a new career. Lending Institutions feel comfortable seeing a consistent work history on your paperwork. Finding a new job (particularly one with a bump in salary) may not change your ability to qualify for your loan. But for some, changing careers during the loan approval process could raise concern and stymie your approval.
Don't change banks or move finances around in your accounts. As your lender considers your mortgage loan application, you will probably be instructed to provide bank statements for the last few months for your saving and checking accounts, money market funds and other liquid finances. To avoid potential fraud, most lenders require detailed paperwork to determine the source of all cash. No matter the reason, moving banks or moving money from one account to another can raise a red flag with your lender and impede your qualification process.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. Your good faith deposit does not belong to the seller: it remains yours until the transaction is final. Your earnest funds are to be used for your expenses upon closing; some FSBO sellers might not know this. An attorney or other type of neutral party can hang onto your earnest funds, or you may place them temporarily into a trust account until you close. Should your home purchase fail, your purchase contract should dictate to whom your good faith deposit should go.
At Metro Mortgage, we answer questions about this process every day. Give us a call: 800-252-6633.