Don't Trip Yourself up While Buying your New 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 furniture store. There are still a few major hurdles to jump before the house is realy yours. Here are some things to avoid before closing to assure the transaction goes well.
Don't make expensive purchases. You may be tempted to buy that new couch for the soon-to-be-yours living room, but it's advisable to stay away from making big ticket purchases like furniture, appliances, jewelry, or vacations until closing. Using credit cards to buy new living room furniture could compromise your loan process by altering your numbers dramatically. Because lenders are reviewing your bank accounts, a large cash purchase is also a mistake.
Don't go on a career search. Lenders look for a consistent work history on your application. Finding a new career (especially one with a bump in salary) may not affect your ability to qualify for your loan. However, finding a new career during your approval process might affect whether or not you are approved.
Don't change banks or move cash around in your bank accounts. As the lender considers your mortgage application, you will probably be instructed to provide bank statements for recent months on your checking accounts, savings accounts, money market funds and other liquid wealth. In order to avoid fraud, lenders will need clear documentation of how you earn your money and where additional funds come from. Switching banks or transferring money elsewhere - even if its only to consolidate funds - could hinder the review of your funds.
Don't give funds directly to your seller (generally in the case of of "for sale by owner") to be used as a "good faith" deposit. Your good faith deposit does not belong to the seller: it remains yours until closing. Your FSBO seller might not know that your good faith money is to go toward your expenses upon closing. We recommend that you put the funds into a trust account, or get an attorney to hold them until the deal closes. If your transaction fails, your contract with the seller should specify where this earnest money should go.
At Coastal Mortgage Corp., we answer questions about this process every day. Give us a call: 504-866-5626.
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