Don't Trip Yourself up While Buying your New Home
What's better than getting a bunch of new stuff to go in your future home? Nothing. But buying big ticket items before your loan closes could be trouble. There still remain a few major hurdles to jump before closing. Here are some actions to avoid during the home buying process to assure the transaction goes well.
Don't overspend on big-ticket items You may be itching to buy that new Turkish rug for the soon-to-be-yours parlor, but it's best to avoid making large buys like furniture, appliances, electronic equipment, or vacations until your home loan closes. Your credit numbers could be altered suddenly if you purchase new furniture using credit cards. Since lending institutions are examining your bank accounts, a large cash purchase is also not advised.
Don't go on a job search. Your recent work history should show stability. Finding a new job (especially one with a bump in salary) may not change your ability to qualify for your mortgage loan. However, switching jobs during your application process could affect whether or not you are approved.
Don't switch banks or move money around in your bank accounts. As your lending institution considers your loan package, you will likely be required to provide bank statements for the last few months for your checking accounts, savings accounts, money market funds and other liquid assets. To avoid fraud, lenders will need clear documentation of how you earn your living and where additional funds come from. Changing banks or transferring finances to another account - even if its merely to consolidate funds - could hinder the review of your funds.
Don't give money directly to your seller (usually in cases of "for sale by owner") for a "good faith" deposit. As a rule, your good faith deposit belongs to you, not the seller up until the deal closes. The earnest money is to be applied to your expenses closing; a FSBO seller may not know this. An attorney or other type of neutral party can hold onto your funds, or you may put them temporarily into a trust account until closing. If your sale falls through, your purchase agreement should document to whom the good faith funds should go.
Community Trust Lending Team at Norcom Mortgage-NMLS ID#71655 can walk you through the pitfalls of getting a mortgage. Call us: (203) 526-9345.