Don't Trip Yourself up While Buying your New Home
What's more fun than getting a bunch of new furnishings to adorn your future home? Nothing. But making big purchases before your loan closes can be an error. Keep in mind that until your keys are in hand, your lender is watching your accounts very closely. We have listed some things below you will want to stay away from when waiting for closing.
Don't throw your money around. You may be itching to turn your new living room into a home magazine cover, or celebrate your new castle, but keep away from expensive purchases like furniture, cars, appliances, or vacations until closing. Financing new Plasma TVs with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. Using cash to purchase big-ticket items can also create a problem: most lending institutions look at your cash reserve when approving your mortgage loan.
Don't go on a job search. Lending Institutions look for a consistent job history on your paperwork. Finding a new career (particularly one with a bigger paycheck) may not hinder your ability to qualify for your loan. But for some people, changing jobs during the loan application process might raise concern and stymie your approval.
Don't move finances around or change banks. While your lender considers your mortgage package, you will likely be required to submit bank statements for the last few months on your checking and savings accounts, money market accounts and other liquid assets. In order to detect fraud, lenders will need a consistent portrayal of how you earn your money and where additional money comes from. Changing banks or transferring funds elsewhere - for whatever purpose - might hinder the review of your funds.
Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your good faith money does not belong to the seller: it remains yours until the transaction is final. Although your FSBO seller might not know this, the good faith funds must be used for your closing expenses. An attorney or other type of neutral party can hold your earnest money, or you may put it temporarily into a trust account until closing. Should your sale fall through, the contract with the seller should document where your good faith deposit should go.
American Commerce Mortgage can walk you through the pitfalls of getting a mortgage. Call us: 714-970-9700.