Don't Trip Yourself up While Buying your New Home
What’s more fun than buying a bunch of new stuff to go in your future home? Nothing. But making big ticket purchases before your loan closes can be an error. There are still a few major hurdles to jump before the house is realy yours. We have given you a list of things below we suggest you stay away from when waiting for closing.
Don’t make expensive purchases. It may be tempting to buy that new couch for the soon-to-be-yours parlor, but it’s best to avoid making large purchases like furniture, appliances, electronic equipment, or vacations until closing. Using plastic to buy furniture could jeopardize your loan process by distorting your numbers. Since lenders are reviewing your financial accounts, a large cash purchase is also not advised.
Don’t look for a new job. Lending Institutions look for a consistent work history on your application forms. Getting a new career before you apply for a mortgage may not get in the way of your approval at all. However, switching careers in the middle of the approval process could influence your approval.
Don’t move cash around or switch banks. Most lenders will instruct the submission of recent bank statements of all of your accounts: savings, checking, money market, and other assets. To eliminate potential fraud, most lending institutions want detailed paperwork to document the source of all funds. No matter the purpose, switching banks or moving money from one account to another could raise a red flag with your lender and slow your approval process.
Don’t hand over a “good faith” deposit directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith money belongs to you, not the seller up until the sale is final. Your seller may not know that this good faith money should go toward your expenses upon closing. Find an attorney or other neutral party who can hold the money or put it in a trust account until closing. Your contract should dictate who gets the deposit if the transaction falls through.
At The Mortgage Exchange Service LLC, we answer questions about this process every day.
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