Don't Trip Yourself up While Buying a New Home
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of taking their enthusiasm straight to the mall or furniture store. Until the house is really yours, there are still some hoops to jump through. Below you'll find a list of things to stay away from during this crucial time of your home purchase.
Don't empty your wallet on big-ticket items It may be tempting to buy that new couch for the soon-to-be-yours parlor, but it's best to stay away from making major purchases like furniture, appliances, jewelry, or cars until your home loan closes. Financing new bedroom furniture with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. It's also a bad idea to make those big-ticket purchases with cash. Lenders are examining your cash on hand when considering your loan.
Don't get a new job. Stability in your job history is a good thing to lending institutions. Finding a new career (particularly one with a better paycheck) may not jeopardize your ability to qualify for your mortgage. However, switching careers during the application process could affect whether or not you are approved.
Don't switch banks or move cash around in your accounts. Bank statements from the last two or three months for accounts in your name (checking, savings, money market, and other accounts) will be reviewed as the lending institution considers your approval. The lending institution needs to see a consistent rise and fall of your funds each month, in order to avoid fraud. Changing banks or transferring money elsewhere - even if its merely to pool funds - could make it harder for your lender to verify your funds.
Don't give funds directly to your seller (usually in cases of "for sale by owner") for earnest money. As a rule, your good faith deposit belongs to you, not the seller up until closing. The good faith money is to go toward your expenses upon closing; the FSBO seller may not understand this. Find a lawyer or other neutral party who will hold the funds or place them in a trust account until you close. The disposition of earnest money, in the case of a failed transaction, should be specified in the contract with your seller.
SelectPlus Lending can answer questions about these "Don'ts" and many others. Call us at 818-889-7300.