Don't Trip Yourself up While Buying your Home
What's better than buying a bunch of new furniture to go in your future home? Nothing. But making big ticket purchases before closing could be trouble. It's best to remember that until your keys are in hand, your lender is watching your accounts very closely. We have listed some actions below you will want to stay away from when waiting for your loan to close.
Don't make expensive purchases. You may be tempted to buy that new sofa 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 closing. Financing your bedroom furniture with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. Because lenders are perusing your financial accounts, a large cash purchase is also a mistake.
Don't get a new career. Your recent career history should show stability. Getting a new career before you start the application process for a mortgage loan may not get in the way of your approval at all. But in some cases, getting a new job during the mortgage application process might bring concern and affect your application.
Don't switch banks or move finances around in your accounts. Your lending institution will require you to submit recent bank statements of all of your accounts: savings, checking, money market, and other liquid assets. In order to eliminate fraud, lenders look for a clear and consistent picture of how you earn your money and where additional wealth comes from. Changing banks or moving funds elsewhere - even if its just to pool funds - may hinder the documentation of your accounts.
Don't deliver a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Your good faith deposit does not belong to the seller: it is actually yours until closing. The earnest money is to be used for your expenses upon closing; some individual sellers may not know this. An attorney or other type of neutral party can hold onto your funds, or you may place them temporarily into a trust account until closing. The final disposition of good faith funds, in the case of a failed transaction, should be specified in the purchase agreement with your seller.
At Tier One Mortgage, LLC, we answer questions about this process every day. Call us: (585) 282-0960.