Don't Trip Yourself up While Buying a Home
What's more fun than getting a bunch of new furniture to adorn your future home? Not much. But buying big ticket items before your loan closes could be trouble. Until the keys are handed over, there still remain some hurdles to jump. Below you'll find a list of things to stay away from during this crucial time of your home purchase.
Don't buy big-ticket items. Although you will be planning ways to turn your new home into a castle, avoid big ticket purchases like appliances, electronics, or furniture. We also recommend that you keep away from vacations and car purchases until your loan closes. Financing new Plasma TVs with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. Using cash to buy big items can also be an issue: many lending institutions take into consideration your cash reserve when approving your loan.
Don't get a new career. Your recent career history should show consistency. Getting a new job may not jeopardize your ability to qualify for a loan - particularly if you are improving your salary. However, switching careers in the middle of your approval process may affect your approval.
Don't change banks or move money around in your accounts. Most lenders will require you to submit recent bank statements for all of your accounts: checking, savings, money market, and other assets. To detect potential fraud, most lending institutions want a thorough paper trail to document the source of all cash. Even for practical purposes, transferring funds or switching banks could make it more difficult for the lender to confirm your account history.
Don't give money directly to your seller (usually in the case of of "for sale by owner") to be considered earnest money. Your good faith deposit does not belong to the seller: it remains yours until the transaction is final. The earnest funds are to be applied to your expenses closing; some sellers might not know this. We recommend that you put the funds into a trust account, or get an attorney to hold them until closing. The final disposition of earnest funds, in the case of a failed transaction, should be specified in the purchase agreement with the seller.
At The Mortgage Exchange Service LLC, we answer questions about this process every day. Call us: 703.255-5810.