Don't Trip Yourself up While Buying your Home
What's more fun than getting a bunch of new stuff to go in your future home? Nothing. But buying big ticket items before closing could be trouble. Until your keys are in hand, there still remain some hoops to jump through. We have given you a list of actions below you will want to stay away from when waiting for your loan to close.
Don't empty your wallet on big-ticket items Although you may be dreaming of ways to turn your new home into a castle, avoid big ticket purchases like appliances, electronics, or furniture. We also recommend that you avoid vacations and vehicle purchases until the closing of your loan. You may send up red flags with your lender if you purchase new electronics on your credit cards in the middle of your loan process. Using cash to purchase big-ticket items can also be a bad idea: most lending institutions look at your cash on hand when approving your loan.
Don't get a new career. Stability in your job history is a positive thing to lending institutions. Finding a new job (particularly one with a bump in salary) may not change your ability to qualify for a loan. But in some cases, changing careers during the loan application process might bring concern and hinder your approval.
Don't switch banks or move money around in your accounts. Bank statements from recent months for accounts in your name (checking, savings, money market, and others) will be analyzed as the lending institution makes decisions regarding your approval. The lender looks for a steady rise and fall of your money over the month, in order to rule out fraud. No matter the reason, moving banks or moving funds from one account to another might raise a red flag with the lender and slow your loan process.
Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until closing, the good faith deposit remains yours. The earnest funds are to be applied to your expenses upon closing; a FSBO seller might not understand this. A neutral party, like an attorney can hold onto your deposit, or you may put it temporarily into a trust account until closing. If your transaction fails, your purchase agreement should indicate where this good faith deposit should go.
Net Equity Financial Mortgage can answer questions about these "Don'ts" and many others. Give us a call at (215)741-3131.