Don't Trip Yourself up While Buying your New Home
What's better than buying a bunch of new stuff to adorn your future home? Not much. But making large purchases before closing could be trouble. Keep in mind that until closing, your lender is watching your accounts very closely. We have given you a list of things below we suggest you avoid when waiting for your loan to close.
Don't buy big-ticket items. You may be itching to turn your new kitchen into a showplace, or celebrate your new castle, but keep away from expensive purchases like furniture, jewelry, appliances, or vacations until your loan closes. Your credit numbers could change suddenly if you make a huge purchase using credit cards. Using cash to purchase big-ticket items can also create an issue: most banks consider your cash reserve when approving your application.
Don't go on a job search. Lenders like to see a consistent career history on your application. Finding a new career (particularly one with a bump in salary) may not change your ability to qualify for your mortgage loan. However, if you switch careers before you qualify, your mortgage process could fail or be stalled.
Don't move finances around or change banks. Bank statements from the last two or three months for accounts in your name (savings, checking, money market, and others) will probably be reviewed as the lending institution considers your loan application. The lender needs to see a steady flow of your funds over the month, in the interest of avoiding fraud. Even for innocent purposes, transferring money or changing banks could make it more difficult for your lending institution to verify your bank history.
Don't give money directly to your seller (generally in the case of of "for sale by owner") for earnest money. As a rule, your good faith money belongs to you, not to the seller until closing. Your seller might not know that any good faith money must go toward your expenses upon closing. Find an attorney or other neutral person who can hold the deposit or place it in a trust account until you close. The purchase agreement should dictate to whom the funds go if the home purchase fails.
Kelly Mortgage Center can walk you through the pitfalls of getting a mortgage. Call us: 949-235-3507.