Don't Trip Yourself up While Buying a Home
Many new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller accepts their offer and the lender approves their loan. Until closing, there are still some hoops to jump through. Here are some actions to avoid during the home buying process to be sure the transaction goes smoothly.
Don't buy big-ticket items. You may be tempted to order that new Turkish rug 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. Using credit cards to buy new living room furniture could compromise your lending process by distorting your numbers. Using cash to buy expensive items can also be a bad idea: many lenders look at your available cash when approving your mortgage loan.
Don't look for a new career. Your recent work history should show stability. Finding a new job (especially one with a bigger salary) may not jeopardize your ability to qualify for your mortgage. However, if you switch careers before you qualify, your process could fail or be stalled.
Don't move cash around or change banks. Most lenders will instruct the submission of recent bank statements of accounts in your name: checking, savings, money market, and other assets. To eliminate potential fraud, most lending institutions require thorough paperwork to document the source of all incoming funds. Changing banks or transferring finances to another account - even if its just to consolidate funds - might hinder the review of your accounts.
Don't deliver earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your good faith deposit does not belong to the seller: it remains yours until the transaction is final. The earnest money is to go toward your expenses upon closing; some sellers may not know this. We recommend that you put the deposit into a trust account, or get a neutral party, like a lawyer, to hold it until closing. Should your sale fall through, your contract with the seller should indicate to whom this good faith funds should go.
At Abundance Home Mortgage, we answer questions about this process every day. Call us: (512) 335-7800.