Don't Trip Yourself up While Buying your New Home
What's better than buying a bunch of new stuff to adorn your future home? Not much. But making big purchases before your loan closes could be trouble. Keep in mind that until you get the keys, your lender is watching you very closely. Below you'll find a list of things to avoid during this crucial time of your home purchase.
Don't buy luxury items. Although you may be listing ways to turn your new home into a castle, avoid big ticket purchases like appliances, electronics, or expensive furnishings. We also recommend that you keep away from vacations and vehicle purchases until your loan closes. Your lender may send up red flags if you buy your appliances on your credit cards in the middle of your loan process. Using cash to buy big-ticket items can even be a mistake: most lending institutions look at your cash reserve when approving your application.
Don't go on a career search. Your recent work history should show stability. Changing jobs may not compromise your ability to qualify for a loan - particularly if you are getting a bigger paycheck. But for some people, changing careers during the loan application process could bring concern and stymie your application.
Don't move finances around or change banks. Your lending institution will instruct the submission of recent bank statements on all of your accounts: checking, savings, money market, and other liquid assets. The lending institution is looking for a steady rise and fall of your funds over the pay period, in order to avoid fraud. No matter the purpose, moving banks or moving money from one account to another might raise a red flag with the lender and slow down your qualification process.
Don't give cash directly to your seller (generally in the case of of "for sale by owner") to be used as earnest money. As a rule, your earnest money is yours, not the seller's up until closing. Any good faith funds are to go toward your expenses upon closing; some FSBO sellers may not understand this. Find an attorney or other neutral person who will hold the money or place it in a trust account until you close. The disposition of good faith money, in the case of a failed transaction, should be specified in the contract with your seller.
At Valley Savers Mortgage, LLC, we answer questions about this process every day. Give us a call at (602) 332-9544.
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