Don't Trip Yourself up While Buying your New Home
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Many new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller accepts their offer and the loan is approved. Until closing, there are still some hurdles to jump. We have listed some actions below you will want to stay away from when waiting for your loan to close.
Don't overspend on big-ticket items Although you may be dreaming of ways to turn your new house into a castle, avoid major purchases like appliances, electronics, or furniture. You will also want to keep away from vacations and car purchases until your loan closes. Your credit numbers could be altered suddenly if you purchase new furniture using plastic. Using cash to buy big items can also be a bad idea: many lenders take into consideration your cash on hand when approving your application.
Don't get a new job. Your recent job history should show consistency. Changing jobs may not affect your ability to qualify for a mortgage loan - particularly if you are improving your salary. But in some cases, switching jobs during the loan approval process might bring concern and stymie your approval.
Don't change banks or move finances around in your bank accounts. Your lending institution will ask for recent bank statements of all of your accounts: checking, savings, money market, and other liquid assets. To avoid potential fraud, most lenders want a thorough paper trail to verify the source of all cash. No matter the reason, changing banks or transferring money might raise a red flag with the lender and slow your approval process.
Don't give funds directly to your seller (usually in the case of of "for sale by owner") for earnest money. Until closing, the earnest money actually belongs to you. Your earnest money is to go toward your expenses closing; some FSBO sellers might not realize this. A neutral party, like an attorney can hang onto your earnest funds, or you may put them temporarily into a trust account until closing. The final disposition of earnest funds, in the case of a failed transaction, should be specified in the contract with the seller.
At Essential Mortgage Co., we answer questions about this process every day. Give us a call at (504) 888-3858.