Don't Trip Yourself up While Buying a Home
Some new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller accepts their offer and the loan is approved. There still remain a few major hurdles to jump before the house is realy yours. Here are some actions to avoid before closing to be sure your transaction goes well.
Don't throw your money around. You may be itching to turn your new living room into a home magazine cover, or celebrate your new castle, but keep away from big purchases like furniture, cars, appliances, or vacations until the loan closes. Financing new stainless steel appliances with a store card or a bank credit card could jeopardize your credit worthiness when you need it the most. Since lending institutions are looking closely at your financial accounts, a large cash purchase is also a mistake.
Don't look for a new career. Lending Institutions feel comfortable seeing a consistent work history on your paperwork. Changing jobs may not compromise your ability to qualify for a loan - especially if you are improving your salary. But in some cases, switching jobs during the mortgage application process might raise concern and stymie your application.
Don't switch your accounts to a new bank or move around your cash. While the lending institution considers your loan package, you will likely be asked to produce bank statements for the last few months on your checking and savings accounts, money market accounts and other liquid finances. To detect potential fraud, most lending institutions require a thorough paper trail to verify the source of all incoming funds. Even for practical reasons, moving around cash or switching banks could make it more difficult for your lender to confirm your bank history.
Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until the sale is complete, the good faith money remains yours. Your earnest funds are to go toward your expenses closing; some individual sellers might not know this. An attorney or other type of neutral party can hold your earnest money, or you may put it temporarily into a trust account until you close. Your contract should dictate who keeps the earnest funds if the home purchase falls through.
At Mutual Security Mortgage, we answer questions about this process every day. Give us a call: (303) 931-7879.