Don't Trip Yourself up While Buying your New Home
What's better than getting a bunch of new furnishings to adorn your future home? Not much. But making big ticket purchases before closing can be an error. Keep in mind that until closing, your lender is watching your accounts very closely. Here are some things to stay clear of during the home buying process to assure the transaction goes smoothly.
Don't buy luxury items. Although you will be planning ways to turn your new home into a showplace, avoid big ticket purchases like appliances, electronics, or expensive furnishings. We also recommend that you avoid vacations and car purchases until your loan closes. Financing new Plasma TVs with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. Since lenders are reviewing your financial accounts, a large cash purchase is also a mistake.
Don't go on a job search. Your recent career history should show consistency. Getting a new job before you apply for a loan may not get in the way of your approval at all. However, if you switch careers before you qualify, your loan process could fail or be stalled.
Don't move money around or change banks. Your lending institution will instruct the submission of recent bank statements of your accounts: checking, savings, money market, and other assets. The lending institution looks for a steady flow of your money over the month, in order to avoid fraud. Even for practical purposes, transferring funds or changing banks may make it difficult for your lender to document your bank history.
Don't hand over a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your earnest money is yours, not the seller's until closing. The earnest money is to be applied to your expenses upon closing; some sellers might not understand this. You'll need to put the funds into a trust account, or get a neutral party, like an attorney to hold them until the closing of the sale. The final disposition of earnest funds, in the case of a failed transaction, should be specified in the purchase agreement with the seller.
Southwest Funding #841 can answer questions about these "Don'ts" and many others. Give us a call: (512) 291-6100.