Don't Trip Yourself up While Buying your Home
What's better than getting a bunch of new furnishings to go in your future home? Not much. But making big purchases before your loan closes could be trouble. Until closing, there are still some hurdles to jump. Here are some actions to avoid before closing to be sure your transaction goes well.
Don't buy luxury items. Although you may be dreaming of ways to turn your new home into a castle, try to stay away from big ticket purchases like appliances, electronics, or expensive furnishings. You will also want to avoid vacations and car purchases until the closing of your loan. Your credit numbers could change suddenly if you make a huge purchase using credit cards. It's even a bad idea to make those large purchases using cash. Lenders are examining your cash reserve when considering your loan.
Don't look for a new job. Consistency in your career history is a good thing to lenders. Getting a new career 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 process could fail or be bogged down.
Don't switch banks or move cash around in your accounts. Bank statements from the last two or three months for accounts in your name (checking, savings, money market, and other accounts) will likely be analyzed as the lending institution makes decisions regarding your loan application. To eliminate potential fraud, most loans require thorough paperwork to document the source of all cash. No matter the reason, switching banks or moving money from one account to another might raise a red flag with the lender and slow down your approval process.
Don't give a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Your good faith money does not belong to the seller: it remains yours until the sale closes. Although your seller may not know this, the good faith money should be applied to your closing expenses. A neutral party, like an attorney can hold onto your deposit, or you may put it temporarily into a trust account until closing. The contract should dictate where the money goes if the home purchase fails.
VSI Home Lending can walk you through the pitfalls of getting a mortgage. Call us: (260) 338-2561.