Don't Trip Yourself up While Buying a New Home
What's better than buying a bunch of new furniture to adorn your future home? Nothing. But buying big ticket items before closing could be trouble. It's wise to remember that until closing, your lender is watching you very closely. Here are some actions to avoid before closing to be sure your transaction goes well.
Don't buy big-ticket items. You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new dream home, but keep away from big purchases like furniture, cars, appliances, or vacations until closing. Your credit numbers could change suddenly if you make a huge purchase using credit cards. Using cash to buy expensive items can even be a problem: many lending institutions take into consideration your cash reserve when approving your mortgage loan.
Don't get a new job. Stability in your work history is a positive thing to banks and other lenders. Getting a new career before you apply for a mortgage loan may not get in the way of your approval at all. But for some people, switching jobs during the mortgage loan application process could raise concern and stymie your approval.
Don't switch your accounts to a new bank or move around your finances. While the lender reviews your mortgage package, you will probably be instructed to provide bank statements for the last two or three months for your checking and savings accounts, money market funds and other liquid assets. In order to eliminate fraud, lenders will need clear documentation of how you earn your money and where additional wealth comes from. No matter the purpose, switching banks or moving funds from one account to another can raise a red flag with the lender and impede 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 transaction is final. Some sellers might not realize that your good faith money should go toward your expenses at closing. You'll want to put the money into a trust account, or get an attorney to hold it until the closing of the sale. Your contract should document who keeps the deposit if the transaction fails.
My FL Home Loans, Inc. can answer questions about these "Don'ts" and many others. Give us a call at (727) 743-1620.