Don't Trip Yourself up While Buying your New Home
What's more fun than getting a bunch of new furniture to adorn your future home? Nothing. But making large purchases before your loan closes can be a mistake. There are still a few major hurdles to jump before your loan closes. Below you'll find a list of actions to stay away from during this crucial time of your home purchase.
Don't make expensive purchases. You may be itching to turn your new kitchen into a showplace, or celebrate your new dream home, but stay away from major purchases like furniture, cars, appliances, or vacations until the loan closes. You may send up red flags with your lender if you buy your electronics on your credit cards during your loan process. Since lending institutions are looking closely at your bank accounts, a large cash purchase is also not advised.
Don't look for a new career. Stability in your work history is a positive thing to lenders. Getting a new job before you start the application process for a mortgage loan may not affect your approval at all. But for some, switching jobs during the mortgage application process could bring concern and hinder your application.
Don't move money around or change banks. Your lender will ask for recent bank statements on all of your accounts: checking, savings, money market, and other assets. In order to detect fraud, lenders want to see a consistent portrayal of how you earn your money and where any additional funds come from. No matter the reason, moving banks or transferring funds can raise a red flag with your lender and slow your approval process.
Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your earnest money does not belong to the seller: it is actually yours until the sale closes. Some sellers may not realize that the good faith funds should go toward your expenses at closing. A neutral party, like an attorney can hold onto your earnest funds, or you may put them temporarily into a trust account until you close. The disposition of earnest money, in the case of a failed transaction, should be indicated in the purchase agreement with your seller.
At Omni Mortgage Corp., we answer questions about this process every day. Give us a call: 7184417000.