Don't Trip Yourself up While Buying a Home
What's better than getting a bunch of new furnishings to adorn your future home? Nothing. But buying big ticket items before your loan closes can be a mistake. Until your loan closes, there are still some hurdles to jump. Here are some actions to refrain from before closing to be sure your transaction goes well.
Don't throw your money around. You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new castle, but keep away from major purchases like furniture, cars, appliances, or vacations until your loan closes. Using credit cards to buy new living room furniture could jeopardize your lending process by altering your numbers dramatically. It's even a bad idea to make those big purchases with cash. Lending Institutions are examining your cash on hand when considering your loan.
Don't get a new job. Your recent job history should show stability. Getting a new job may not affect your ability to qualify for a loan - particularly if you are getting a better salary. However, if you switch careers before you qualify, your mortgage process could fail or be slowed down.
Don't switch banks or move money around in your accounts. Bank statements from the last few months for accounts in your name (checking, savings, money market, and other assets) will be reviewed as the lending institution makes decisions regarding your application. Your lending institution is looking for a consistent flow of your funds over the month, in the interest of avoiding fraud. Changing banks or transferring money to another account - for whatever purpose - could hinder the review of your accounts.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, cash in hand. Your good faith deposit does not belong to the seller: it is actually yours until closing. Your seller might not know that this good faith money is to be used for your expenses at closing. It's advisable to put the deposit into a trust account, or get a neutral party, like a lawyer, to hold it until the deal closes. The purchase agreement should dictate to whom the funds go if the home purchase fails.