Don't Trip Yourself up While Buying your New Home
What's more fun than getting a bunch of new furnishings to go in your future home? Nothing. But buying big ticket items before closing can be a mistake. There are still a few major hurdles to jump before the house is realy yours. Below you'll find a list of things to avoid during this critical time of your home purchase.
Don't empty your wallet on big-ticket items It may be tempting to buy that new easy-chair for the soon-to-be-yours living room, but it's best to stay away from making major purchases like furniture, appliances, jewelry, or cars until your home loan closes. Your credit numbers could be altered suddenly if you make a huge purchase using credit cards. It's also a bad idea to make those large purchases using cash. Lenders are examining your cash reserve when considering your loan.
Don't get a new job. Stability in your career history is a good thing to lending institutions. Getting a new career before you apply for a mortgage loan may not affect your approval at all. However, switching careers during the application process might affect whether or not you are approved.
Don't change banks or move finances around in your bank accounts. As the lender reviews your mortgage loan application, you will likely be required to submit bank statements for the last few months on your checking accounts, savings accounts, money market funds and other liquid assets. To detect potential fraud, most loans require detailed paperwork to determine the source of all cash. No matter the reason, switching banks or moving money from one account to another may raise a red flag with the lender and slow down your approval process.
Don't give cash directly to your seller (generally in cases of "for sale by owner") to be considered a "good faith" deposit. Your good faith deposit does not belong to the seller: it is actually yours until the sale closes. Some sellers may not know that these good faith funds is to go toward your expenses upon closing. A neutral party, like an attorney can hold your funds, or you may place them temporarily into a trust account until closing. If your sale falls through, your purchase contract should dictate to whom this good faith funds should go.
The Mortgage Exchange Service LLC can walk you through the pitfalls of getting a mortgage. Call us at 703.255-5810.