Don't Trip Yourself up While Buying your Home
What's more fun than getting a bunch of new furnishings to adorn your future home? Nothing. But buying big ticket items before closing could be trouble. It's wise to remember that until your keys are in hand, your lender is watching your accounts very closely. We have listed some actions below we suggest you avoid when waiting for closing.
Don't make expensive purchases. It may be tempting to order that new Turkish rug for the soon-to-be-yours parlor, but it's best to stay away from making large purchases like furniture, appliances, electronic equipment, or cars until your home loan closes. Using credit cards to buy furniture could compromise your lending process by changing your numbers dramatically. Because lending institutions are looking closely at your financial accounts, a large cash purchase is also a mistake.
Don't get a new job. Your recent work history should show consistency. Getting a new job before you start the application process for a mortgage may not get in the way of your approval at all. However, switching jobs during the loan process may affect your approval.
Don't move cash around or switch banks. Most lenders will ask for recent bank statements of all of your accounts: checking, savings, money market, and other assets. Your lender will need to see a steady flow of your money each pay period, in order to rule out fraud. Even for innocent purposes, transferring money or changing banks might make it difficult for your lender to verify your bank history.
Don't give funds directly to your seller (generally in the case of of "for sale by owner") to be considered a "good faith" deposit. Your good faith deposit does not belong to the seller: it is actually yours until closing. Although your FSBO seller may not know this, the good faith money must go toward your closing expenses. Get a lawyer or other neutral person who is able to hold the money or put it in a trust account until closing. The disposition of earnest funds, in the case of a failed transaction, should be specified in the purchase agreement with your seller.
Boardwalk Mortgage can answer questions about these "Don'ts" and many others. Call us: 1-800-606-2794.