Don't Trip Yourself up While Buying your Home
What's more fun than getting a bunch of new stuff to adorn your future home? Not much. But making big purchases before closing could be trouble. It's wise to remember that until your keys are in hand, your lender is watching your finances very closely. We have listed some actions below we suggest you stay away from when waiting for your loan to close.
Don't make expensive purchases. You may be itching to buy that new sofa for the soon-to-be-yours parlor, but it's best to avoid making big ticket purchases like furniture, appliances, jewelry, or cars until closing. Your credit numbers could be altered suddenly if you make a huge purchase using credit cards. It's even a red flag to make those large purchases with cash. Lenders are examining your cash reserve when considering your loan.
Don't go on a job search. Your recent career history should show stability. Finding a new job (particularly one with a bigger paycheck) may not jeopardize your ability to qualify for your mortgage. However, if you switch careers before your loan is approved, your mortgage process could fail or be bogged down.
Don't take your accounts to a new bank or move around your cash. Bank statements from recent months for your accounts (checking, savings, money market, and other accounts) will likely be analyzed as the lending institution considers your approval. The lending institution needs to see a consistent flow of your money over the month, in the interest of avoiding fraud. No matter the purpose, changing banks or moving funds from one account to another might raise a red flag with the lender and slow your loan process.
Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your good faith deposit does not belong to the seller: it remains yours until closing. Your seller might not realize that your earnest money should be applied to your expenses at closing. It's wise to put the money into a trust account, or get an attorney to hold it until closing. Should your home purchase fail, your purchase contract should indicate to whom your earnest money should go.
VSI Home Lending can answer questions about these "Don'ts" and many others. Call us at (260) 338-2561.