Don't Trip Yourself up While Buying a New Home
Many new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller accepts their offer and the loan is approved. Keep in mind that until you get the keys, your lender is watching your finances very closely. Here are some actions to stay clear of before closing to be sure the transaction goes well.
Don't buy luxury items. It may be tempting to buy that new couch for the soon-to-be-yours parlor, but it's best to stay away from making big ticket purchases like furniture, appliances, electronic equipment, or vacations until closing. Financing new furniture with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. It's even a red flag to make those big purchases using cash. Lending Institutions are looking at your cash on hand when considering your loan.
Don't get a new career. Your recent job history should show consistency. Getting a new job may not compromise your ability to qualify for a loan - especially if you are going to be making more money. But for some people, changing jobs during the mortgage loan approval process might raise concern and hinder your approval.
Don't switch banks or move cash around in your bank accounts. Bank statements from the last two or three months for all of your accounts (savings, checking, money market, and others) will probably be studied as the lender considers your mortgage application. The lender hopes to see a steady flow of your money each pay period, in order to avoid fraud. No matter the purpose, switching banks or moving funds from one account to another might raise a red flag with your lender and slow your application process.
Don't give money directly to your seller (generally in cases of "for sale by owner") to be considered earnest money. Until closing, the good faith money actually belongs to you. Although some individual sellers might not realize this, any good faith funds should go toward your closing expenses. Find an attorney or other neutral person who can hang on to the deposit or place it in a trust account until you close. The contract should document who keeps the money if the transaction fails.
At Mario Vega, we answer questions about this process every day. Give us a call at 877-310-6200.
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