Don't Trip Yourself up While Buying a New Home
What's better than buying a bunch of new stuff to adorn your future home? Nothing. But making big ticket purchases before your loan closes can be an error. There still remain a few major hurdles to jump before closing. Here are some actions to stay clear of during the home buying process to assure the transaction goes smoothly.
Don't empty your wallet on big-ticket items It may be tempting to buy that new couch for the soon-to-be-yours living room, but it's best to stay away from making large purchases like furniture, appliances, jewelry, or cars until your home loan closes. Using credit cards to buy new living room furniture could compromise your loan process by changing your numbers dramatically. Using cash to buy big-ticket items can also be a problem: most banks take into consideration your cash on hand when approving your application.
Don't look for a new career. Your recent career history should show consistency. Getting a new career before you apply for a mortgage may not jeopardize your approval at all. However, switching careers during your approval process may influence whether or not you are approved.
Don't move cash around or change banks. Bank statements from the last few months for accounts in your name (checking, savings, money market, and other accounts) will likely be studied as the lender considers your application. Your lending institution is looking for a steady flow of your money each pay period, in the interest of avoiding fraud. Even for innocent reasons, transferring cash or changing banks may make it difficult for the lending institution to document your bank history.
Don't give money directly to your seller (usually in the case of of "for sale by owner") for a "good faith" deposit. Your earnest money does not belong to the seller: it remains yours until the sale closes. Although some individual sellers may not realize this, your earnest money should go toward your closing expenses. An attorney or other type of neutral party can hold onto your earnest funds, or you may put them temporarily into a trust account until closing. Your purchase agreement should document who keeps the earnest funds if the home purchase falls through.
VSI Home Lending can walk you through the pitfalls of getting a mortgage. Call us: (260) 338-2561.