Don't Trip Yourself up While Buying a New Home
Many new homebuyers make the mistake of rushing out to buy things to fill their home as soon as the seller says "yes" and the loan is approved. There are still a few major hurdles to jump before your loan closes. We have given you a list of things below you will want to stay away from when waiting for your loan to close.
Don't empty your wallet on big-ticket items It may be tempting to order that new couch for the soon-to-be-yours parlor, but it's advisable to stay away from making major purchases like furniture, appliances, jewelry, or vacations until your home loan closes. Your lender may send up red flags if you purchase your appliances on your credit cards in the middle of your loan process. Since lenders are reviewing your financial accounts, a large cash purchase is also not advised.
Don't get a new job. Your recent work history should show consistency. Getting a new job may not compromise your ability to qualify for a loan - especially if you are going to be making more money. However, if you switch careers before your loan is approved, your loan process could fail or be stalled.
Don't switch your accounts to a new bank or move around your money. As the lending institution reviews your mortgage loan application, you will likely be instructed to produce bank statements for the last two or three months on your checking accounts, savings accounts, money market funds and other liquid finances. Your lending institution will need to see a steady flow of your funds over the pay period, in the interest of avoiding fraud. Changing banks or moving money elsewhere - no matter the purpose - could hinder the review of your accounts.
Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith money belongs to you, not to the seller until the sale is final. Although your FSBO seller may not understand this, your earnest money should be used for the buyer's closing expenses. Get a lawyer or other neutral person who will hang on to the money or place it in a trust account until you close. The disposition of earnest money, in the case of a failed transaction, should be documented in the contract with your seller.
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.