Don't Trip Yourself up While Buying a Home
What's better than getting a bunch of new furnishings to go in your future home? Not much. But buying big ticket items before your loan closes can be harmful. Until closing, there are still some hurdles to jump. Below you'll find a list of things to avoid during this critical time of your home purchase.
Don't make expensive purchases. It may be tempting to buy that new Turkish rug for the soon-to-be-yours parlor, but it's advisable to stay away from making large buys like furniture, appliances, jewelry, or vacations until your home loan closes. Your credit numbers could change suddenly if you purchase new furniture using plastic. It's also a mistake to make those huge purchases with cash. Lenders are looking at your cash on hand when considering your loan.
Don't get a new career. Lenders look for a consistent job history on your application. Finding a new career (especially one with a bump in salary) may not hinder your ability to qualify for your mortgage loan. However, if you switch careers before your loan is approved, your process could fail or be slowed down.
Don't take your accounts to a new bank or move around your money. Bank statements from the last two or three months for accounts in your name (checking, savings, money market, and other accounts) will probably be reviewed as the lending institution considers your loan application. In order to detect fraud, lenders will need a consistent portrayal of how you earn your living and where any additional wealth comes from. No matter the purpose, changing banks or moving funds from one account to another could raise a red flag with the lender and impede your approval process.
Don't deliver earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your good faith deposit does not belong to the seller: it is actually yours until the transaction is final. Although some individual sellers may not know this, the earnest money should be used for the buyer's closing expenses. It's advisable to put the money into a trust account, or get a neutral party, like an attorney, to hold it until the deal closes. The final disposition of good faith money, if your sale falls through, should be documented in the purchase agreement with the seller.
At Hancock Mortgage Partners, LLC NMLS# 229844, we answer questions about this process every day. Call us: 225 819 7670.