Don't Trip Yourself up While Buying your New Home
What's better than getting a bunch of new furnishings to adorn your future home? Nothing. But making big purchases before your loan closes could be trouble. Keep in mind that until you get the keys, your lender is watching your accounts very closely. Here are some things to stay clear of during the home buying process to assure the transaction goes smoothly.
Don't make expensive purchases. You may be itching to turn your new living room into a home magazine cover, or celebrate your new castle, but stay away from big purchases like furniture, cars, appliances, or vacations until the loan closes. Your credit numbers could be altered suddenly if you purchase new furniture using plastic. It's even a mistake to make those huge purchases using cash. Lenders are looking at your cash reserve when considering your loan.
Don't go on a job search. Stability in your work history is a positive thing to lending institutions. Changing jobs may not compromise your ability to qualify for a mortgage loan - especially if you are getting a bigger paycheck. But for some, switching jobs during the loan application process might bring concern and affect your application.
Don't move finances around or switch banks. Bank statements from the last few months for all of your accounts (savings, checking, money market, and others) will likely be reviewed as the lending institution makes decisions regarding your approval. To detect potential fraud, most lending institutions require a thorough paper trail to verify the source of all incoming funds. Even for innocent reasons, transferring funds or switching banks may make it more difficult for the lender to confirm your account history.
Don't hand over a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Until the sale is complete, the earnest money actually belongs to you. Some FSBO sellers might not know that the good faith funds is to go toward your expenses upon closing. Get an attorney or other neutral person who can hang on to the deposit or put it in a trust account until closing. Your contract should document who keeps the deposit if the home purchase 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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