Don't Trip Yourself up While Buying a Home
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With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the mistake of bringing their enthusiasm straight to the mall or furniture store. Keep in mind that until closing, your lender is watching your accounts very closely. Below you'll find a list of things to avoid during this critical time of your home purchase.
Don't buy luxury items. You may be tempted to order that new easy-chair for the soon-to-be-yours living room, but it's advisable to stay away from making large purchases like furniture, appliances, jewelry, or cars until closing. Financing new stainless steel appliances with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. Because lending institutions are reviewing your financial accounts, a large cash purchase is also not advised.
Don't get a new career. Consistency in your work history is a good thing to banks and other lenders. Getting a new job before you apply for a mortgage loan may not compromise your approval at all. However, switching jobs during the loan process might affect your approval.
Don't move money around or switch banks. While your lender considers your mortgage loan package, you will probably be instructed to provide bank statements for recent months on your checking accounts, savings accounts, money market accounts and other liquid finances. In order to detect fraud, lenders look for a consistent portrayal of how you earn your living and where any additional funds come from. No matter the purpose, moving banks or transferring money could raise a red flag with your lender and impede your loan process.
Don't give your FSBO (for sale by owner) seller earnest money, delivered to his door. Your good faith money does not belong to the seller: it is actually yours until the sale closes. Although some FSBO sellers might not realize this, your good faith funds should be used for the buyer's closing expenses. A neutral party, like an attorney can hold your earnest money, or you may put it temporarily into a trust account until you close. If your sale falls through, the purchase contract should specify where your good faith deposit should go.
At Pro-Active Mortgage, we answer questions about this process every day. Call us: 503-524-3331.