Don't Trip Yourself up While Buying a New Home
In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of taking their enthusiasm straight to the mall or appliance store. Until your loan closes, there still remain some hurdles to jump. Here are some actions to avoid during the home buying process to be sure your transaction goes smoothly.
Don't buy luxury items. It may be tempting to buy that new easy-chair for the soon-to-be-yours den, but it's best to stay away from making large purchases like furniture, appliances, electronic equipment, or vacations until closing. Financing new furniture with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. Because lenders are looking closely at your financial accounts, a large cash purchase is also not advised.
Don't look for a new career. Lenders look for a consistent career history on your application. Getting a new job may not compromise your ability to qualify for a mortgage loan - especially if you are going to be making more money. However, if you switch careers before your loan is approved, your process could fail or be bogged down.
Don't take your accounts to a new bank or move around your cash. Bank statements from the last two or three months for all of your accounts (savings, checking, money market, and other assets) will probably be reviewed as the lending institution makes decisions regarding your mortgage application. To avoid potential fraud, most loans want detailed paperwork to determine the source of all funds. Switching banks or moving finances to another account - even if its only to consolidate funds - might make it harder for the lender to review your funds.
Don't give cash directly to your seller (usually in the case of of "for sale by owner") to be considered a "good faith" deposit. As a rule, your good faith deposit belongs to you, not to the seller up until closing. Some sellers might not know that any good faith funds must be applied to your expenses upon closing. We recommend that you put the money into a trust account, or get a neutral party, like a lawyer, to hold it until the deal closes. The final disposition of earnest funds, in the case of a failed transaction, should be indicated in the purchase agreement with your seller.
Abbey Mortgage can answer questions about these "Don'ts" and many others. Call us at 352-369-4200.