Don't Trip Yourself up While Buying your Home
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What's better than getting a bunch of new stuff to go in your future home? Not much. But making large purchases prior to closing can be a misstep. Keep in mind that until closing, your lender is watching you very closely. We have listed some actions below we suggest you avoid 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 stay away from major purchases like furniture, cars, appliances, or vacations until the loan closes. Financing new furniture with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. Because lenders are looking closely at your bank accounts, a large cash purchase is also a bad idea.
Don't get a new job. Lending Institutions like to see a consistent work history on your paperwork. Finding a new job (especially one with a better paycheck) may not affect your ability to qualify for your mortgage loan. But for some, changing jobs during the mortgage approval process may raise concern and hinder your approval.
Don't take your accounts to a new bank or move around your money. While the lending institution reviews your mortgage package, you will probably be required to produce bank statements for the last few months on your saving and checking accounts, money market accounts and other liquid finances. In order to detect fraud, lenders require clear documentation of how you earn your living and where additional funds come from. No matter the purpose, changing banks or moving funds from one account to another may raise a red flag with your lender and impede your qualification process.
Don't give money directly to your seller (usually in cases of "for sale by owner") to be considered earnest money. As a rule, your good faith money belongs to you, not to the seller up until the deal closes. Although some FSBO sellers may not realize this, any good faith money should be applied to the buyer's closing expenses. We recommend that you put the funds into a trust account, or get a neutral person, like an attorney to hold them until the deal closes. The contract should indicate to whom the money goes if the home purchase fails.
Integrity Mortgage and Financial Services Inc can answer questions about these "Don'ts" and many others. Give us a call at 219-548-2255.