Don't Trip Yourself up While Buying a New Home
What's more fun than buying a bunch of new furniture to go in your future home? Not much. But making big purchases before closing can be a misstep. There are still a few major hurdles to jump before the keys are handed over. Here are some things to refrain from before closing to assure the transaction goes well.
Don't buy big-ticket items. You may be itching to order that new sofa for the soon-to-be-yours parlor, but it's advisable to avoid making big ticket buys like furniture, appliances, jewelry, or cars until closing. Using credit cards to buy new living room furniture could compromise your lending process by altering your numbers dramatically. Because lenders are examining your bank accounts, a large cash purchase is also not advised.
Don't get a new career. Stability in your work history is a good thing to banks and other lenders. Getting a new job before you start the application process for a mortgage loan may not jeopardize your approval at all. However, if you switch careers before your loan is approved, your loan process could fail or be stalled.
Don't change banks or move cash around in your bank accounts. As your lender reviews your loan application, you will probably be required to provide bank statements for the last two or three months for your checking and savings accounts, money market funds and other liquid finances. Your lender is looking for a steady flow of your money over the month, in the interest of avoiding fraud. Switching banks or moving funds to another account - no matter the reason - might hinder the documentation of your funds.
Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. Your good faith deposit does not belong to the seller: it remains yours until closing. Any good faith funds are to go toward your expenses upon closing; some sellers might not understand this. An attorney or other type of neutral party can hold onto your earnest money, or you may put it temporarily into a trust account until closing. The contract should specify who gets the money if the home purchase fails.
At Action Mortgage, we answer questions about this process every day. Call us: (713) 723-7800.