Don't Trip Yourself up While Buying your New Home
Some new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller says "yes" and the loan is approved. It's best to remember that until you get the keys, your lender is watching you very closely. Here are some things to refrain from before closing to assure the transaction goes smoothly.
Don't overspend on big-ticket items You may be itching to order that new Turkish rug for the soon-to-be-yours living room, but it's advisable to avoid making large buys like furniture, appliances, electronic equipment, or cars until your home loan closes. You may send up red flags with your lender if you finance your appliances on your credit cards in the middle of your loan process. Since lenders are reviewing your bank accounts, a large cash purchase is also a bad idea.
Don't look for a new career. Stability in your career history is a positive thing to banks and other lenders. Finding a new job (especially one with a bigger paycheck) may not jeopardize your ability to qualify for a mortgage. However, finding a new job in the middle of the application process may affect your approval.
Don't move finances around or change banks. As the lending institution reviews your loan application, you will likely be instructed to produce bank statements for recent months on your saving and checking accounts, money market funds and other liquid assets. To eliminate fraud, lenders require a clear and consistent picture of how you earn your living and where additional wealth comes from. No matter the reason, changing banks or transferring funds could raise a red flag with your lender and slow your qualification process.
Don't give money directly to your seller (generally in cases of "for sale by owner") to be used as earnest money. As a rule, your earnest money is yours, not the seller's until the deal closes. Although your FSBO seller might not realize this, your good faith money should go toward the buyer's closing expenses. Find an attorney or other neutral person who will hold the funds or place them in a trust account until you close. If your transaction fails, your purchase agreement should indicate to whom this good faith funds should go.
At Metro Mortgage, we answer questions about this process every day. Call us at 866-300-1550.