Don't Trip Yourself up While Buying your New Home
What's better than getting a bunch of new furnishings to adorn your future home? Not much. But buying big ticket items before your loan closes can be an error. Until the house is really yours, there still remain some hoops to jump through. Here are some actions to avoid during the home buying process to be sure your transaction goes well.
Don't buy luxury items. Although you may be planning ways to turn your new house into a castle, avoid major purchases like appliances, electronics, or furniture. You will also want to avoid vacations and vehicle purchases until your loan closes. You may send up red flags with your lender if you finance your furniture on your credit cards during your loan process. Because lending institutions are reviewing your financial accounts, a large cash purchase is also a mistake.
Don't go on a job search. Lenders like to see a consistent work history on your application. Getting a new career before you apply for a mortgage may not compromise your approval at all. But for some people, changing jobs during the loan application process may raise concern and affect your approval.
Don't move finances around or change banks. Bank statements from recent months for all of your accounts (savings, checking, money market, and others) will be reviewed as the lending institution makes decisions regarding your mortgage application. Your lending institution needs to see a steady flow of your funds each month, in order to rule out fraud. No matter the purpose, changing banks or moving money from one account to another may raise a red flag with your lender and impede your approval process.
Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until closing, the earnest money actually belongs to you. Any good faith funds are to be used for your expenses upon closing; your FSBO seller might not realize this. Get an attorney or other neutral party who will hold the deposit or put it in a trust account until closing. The purchase contract should specify who keeps the earnest funds if the transaction does not go through.
Tier One Mortgage, LLC can answer questions about these "Don'ts" and many others. Call us: (585) 282-0960.