Don't Trip Yourself up While Buying a Home
What's better than getting a bunch of new stuff to adorn your future home? Not much. But making big purchases before your loan closes could be trouble. Keep in mind that until your keys are in hand, your lender is watching your finances very closely. We have given you a list of actions below we suggest you avoid when waiting for your loan to close.
Don't overspend on big-ticket items You may be itching to turn your new kitchen into a showplace, or celebrate your new dream home, but stay away from expensive purchases like furniture, jewelry, appliances, or vacations until the loan closes. Your credit numbers could change suddenly if you make a huge purchase using plastic. Using cash to purchase expensive items can also create an issue: most banks consider your available cash when approving your loan.
Don't go on a job search. Your recent work history should show consistency. Getting a new career before you start the application process for a mortgage may not affect your approval at all. However, if you switch careers before you qualify, your process could fail or be bogged down.
Don't take your accounts to a new bank or move around your cash. Bank statements from the last few months for accounts in your name (checking, savings, money market, and others) will be studied as the lender considers your approval. To detect fraud, lenders look for clear documentation of how you earn your money and where any additional funds come from. Even for practical reasons, moving around funds or changing banks might make it difficult for the lending institution to verify your bank history.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. Your good faith deposit does not belong to the seller: it is actually yours until the sale closes. Although some individual sellers might not know this, your earnest money must be used for your closing expenses. A neutral party, like an attorney can hold onto your earnest funds, or you may put them temporarily into a trust account until closing. If your transaction fails, your contract with the seller should document to whom this earnest money should go.
Coastal Mortgage Corp. can walk you through the pitfalls of getting a mortgage. Give us a call at 504-866-5626.
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