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 can be a misstep. It's wise to remember that until you get the keys, your lender is watching your accounts very closely. Here are some actions to avoid before closing to assure the transaction goes smoothly.
Don't empty your wallet on big-ticket items You may be itching to buy that new Turkish rug for the soon-to-be-yours living room, but it's advisable to avoid making big ticket buys like furniture, appliances, jewelry, or cars until closing. You may send up red flags with your lender if you purchase your furniture on your credit cards in the middle of your loan process. Using cash to buy big-ticket items can also create a problem: most banks look at your available cash when approving your loan.
Don't look for a new job. Your recent work history should show consistency. Getting a new job before you start the application process for a loan may not affect your approval at all. But for some, changing careers during the mortgage approval process might raise concern and affect your application.
Don't move cash around or change banks. Your lending institution will instruct the submission of recent bank statements for your accounts: savings, checking, money market, and other assets. To eliminate potential fraud, most lending institutions want detailed paperwork to determine the source of all cash. No matter the reason, moving banks or moving money from one account to another may raise a red flag with your lender and slow down your application process.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. Your earnest money does not belong to the seller: it is actually yours until the transaction is final. Although some individual sellers might not know this, the earnest money should go toward the buyer's closing expenses. An attorney or other type of neutral party can hold your funds, or you may put them temporarily into a trust account until you close. Your contract should dictate who gets the earnest funds if the transaction does not go through.
At Coastal Mortgage Corp., we answer questions about this process every day. Give us a call at 504-866-5626.
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