Don't Trip Yourself up While Buying a Home
With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the error of carrying their enthusiasm straight to the mall or appliance store. Until your keys are in hand, there still remain some hoops to jump through. Here are some things to stay clear of before closing to be sure the transaction goes smoothly.
Don't throw your money around. You may be itching to buy that new easy-chair for the soon-to-be-yours parlor, but it's advisable to avoid making major purchases like furniture, appliances, jewelry, or vacations until your home loan closes. You may send up red flags with your lender if you buy new electronics on your credit cards in the middle of your loan process. It's also a red flag to make those huge purchases with cash. Lending Institutions are looking at your cash reserve when considering your loan.
Don't look for a new career. Consistency in your career history is a good thing to banks and other lenders. Changing jobs may not compromise your ability to qualify for a loan - particularly if you are improving your salary. However, if you switch careers before approval, your mortgage process could fail or be bogged down.
Don't change banks or move finances around in your bank accounts. While the lender reviews your loan application, you will likely be instructed to produce bank statements for the last two or three months for your saving and checking accounts, money market funds and other liquid assets. Your lender looks for a consistent rise and fall of your money over the month, in order to rule out fraud. Even for practical reasons, transferring cash or changing banks could make it difficult for your lending institution to confirm your bank history.
Don't give your FSBO (for sale by owner) seller earnest money, delivered to his door. Until closing, the earnest money remains yours. Although some individual sellers may not understand this, any good faith money must be applied to your closing expenses. A neutral party, like an attorney can hold your funds, or you may place them temporarily into a trust account until closing. Should your sale fall through, the purchase agreement should specify to whom your earnest money should go.
At Coastal Mortgage Corp., we answer questions about this process every day. Give us a call at 504-866-5626.
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