Don't Trip Yourself up While Buying your New Home
What's more fun than buying a bunch of new furniture to go in your future home? Nothing. But making big ticket purchases before your loan closes can be an error. There are still a few major hurdles to jump before your loan closes. Here are some things to avoid during the home buying process to assure your transaction goes well.
Don't throw your money around. You may be tempted to order that new couch for the soon-to-be-yours parlor, but it's advisable to stay away from making major buys like furniture, appliances, electronic equipment, or vacations until closing. 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 bank accounts, a large cash purchase is also not advised.
Don't look for a new job. Lending Institutions feel comfortable seeing a consistent work history on your application forms. Getting a new job before you start the application process for a mortgage loan may not get in the way of your approval at all. However, switching careers in the middle of your loan process may influence whether or not you are approved.
Don't take your accounts to a new bank or move around your finances. Your lender will require you to produce recent bank statements of your accounts: checking, savings, money market, and other assets. The lending institution wants to see a consistent rise and fall of your funds each pay period, in order to avoid fraud. No matter the purpose, changing banks or transferring funds could raise a red flag with the lender and impede your approval process.
Don't give money directly to your seller (usually in the case of of "for sale by owner") to be considered earnest money. Until the sale is complete, any good faith money remains yours. Any earnest money is to go toward your expenses closing; some FSBO sellers might not realize this. You'll want to put the money into a trust account, or get an attorney to hold it until the deal closes. The final disposition of earnest money, in the case of a failed transaction, should be documented in the purchase agreement with the seller.
Southwest Funding #841 can answer questions about these "Don'ts" and many others. Call us: (512) 291-6100.