Don't Trip Yourself up While Buying your New Home
What's better than getting a bunch of new stuff to adorn your future home? Nothing. But buying big ticket items before closing can be a mistake. There still remain a few major hurdles to jump before the keys are handed over. Here are some things to stay clear of before closing to assure your transaction goes smoothly.
Don't overspend on big-ticket items You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new castle, but keep away from big purchases like furniture, cars, appliances, or vacations until your loan closes. Financing your furniture with a store card or a bank credit card could put your credit worthiness at risk when you need it the most. Since lending institutions are examining your bank accounts, a large cash purchase is also not advised.
Don't get a new career. Your recent work history should show consistency. Finding a new job (particularly one with a bump in salary) may not affect your ability to qualify for your mortgage. But in some cases, getting a new career during the mortgage loan approval process might raise concern and hinder your approval.
Don't move finances around or switch banks. While the lender considers your loan package, you will likely be required to produce bank statements for the last few months for your checking accounts, savings accounts, money market funds and other liquid wealth. Your lending institution looks for a consistent rise and fall of your money over the month, in order to avoid fraud. Switching banks or moving money to another account - for whatever purpose - may hinder the review of your accounts.
Don't give money directly to your seller (usually in the case of of "for sale by owner") to be used as a "good faith" deposit. As a rule, your good faith deposit is yours, not the seller's up until closing. The FSBO seller may not realize that your good faith money is to be applied to your expenses at closing. We recommend that you put the money into a trust account, or get a neutral party, like an attorney, to hold it until closing. Should your home purchase fail, your purchase contract should document where the earnest money should go.
At Price Mortgage Group LLC, we answer questions about this process every day. Call us: 405-513-7700.