Don't Trip Yourself up While Buying your New Home
What's more fun than getting a bunch of new furnishings to adorn your future home? Nothing. But buying big ticket items before closing can be harmful. There are still a few major hurdles to jump before the house is realy yours. Below you'll find a list of things to stay away from during this crucial time of your home purchase.
Don't buy luxury items. It may be tempting to buy that new Turkish rug for the soon-to-be-yours parlor, but it's advisable to avoid making large buys like furniture, appliances, electronic equipment, or cars until your home loan closes. Financing new stainless steel appliances with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. It's even a red flag to make those big purchases with cash. Lenders are examining your cash reserve when considering your loan.
Don't go on a job search. Lending Institutions feel comfortable seeing a consistent job history on your paperwork. Getting a new career before you apply for a mortgage loan may not jeopardize your approval at all. However, getting a new job in the middle of the approval process may affect your approval.
Don't change banks or move finances around in your bank accounts. Bank statements from the last two or three months for accounts in your name (savings, checking, money market, and others) will be analyzed as the lending institution makes decisions regarding your mortgage application. To detect potential fraud, most lenders require a thorough paper trail to verify the source of all funds. Even for practical purposes, moving around money or changing banks may make it difficult for the lending institution to verify your account history.
Don't give your FSBO (for sale by owner) seller earnest money, made out directly to him. Until the sale is complete, the good faith money remains yours. Any good faith funds are to go toward your expenses upon closing; some sellers may not realize this. Find an attorney or other neutral person who is able to hang on to the deposit or put it in a trust account until you close. Your contract should indicate who gets the money if the transaction falls through.
At VSI Home Lending, we answer questions about this process every day. Give us a call at 2603382561.