Don't Trip Yourself up While Buying a Home
What's better than getting a bunch of new furniture to adorn your future home? Not much. But making big ticket purchases before your loan closes could be trouble. Until the keys are handed over, there still remain some hoops to jump through. Here are some actions to refrain from during the home buying process to be sure your transaction goes well.
Don't make expensive purchases. You may be itching to turn your new living room into a showplace, or celebrate your new castle, but keep away from expensive purchases like furniture, jewelry, appliances, or vacations until your loan closes. Financing new bedroom furniture with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. Using cash to buy expensive items can also create an issue: most lending institutions consider your available cash when approving your mortgage.
Don't get a new career. Consistency in your job history is a positive thing to banks and other lenders. Getting a new job may not affect your ability to qualify for a mortgage loan - especially if you are getting a bigger paycheck. However, switching jobs during your approval process could influence your approval.
Don't take your accounts to a new bank or move around your money. Bank statements from recent months for all of your accounts (savings, checking, money market, and other accounts) will likely be reviewed as the lender makes decisions regarding your loan application. In order to avoid fraud, lenders will need clear documentation of how you earn your money and where any additional wealth comes from. Changing banks or transferring finances elsewhere - for whatever purpose - might make it difficult for your lender to verify your funds.
Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your earnest money belongs to you, not the seller until closing. The good faith money is to be used for your expenses closing; some individual sellers may not realize this. Get a lawyer or other neutral party who will hang on to the money or put it in a trust account until closing. The disposition of earnest money, if your home purchase falls through, should be specified in the purchase agreement with the seller.
At Financial Edge Mortgage Corp., we answer questions about this process every day. Call us: 425-508-9988.
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