Don't Trip Yourself up While Buying your New Home
With the thrill that comes with an accepted offer and a "yes" from the lender, many homebuyers make the mistake of carrying their enthusiasm straight to the mall or furniture store. There still remain a few major hurdles to jump before the keys are handed over. Here are some actions to avoid before closing to be sure your transaction goes smoothly.
Don't buy big-ticket items. Although you may be dreaming of ways to turn your new home into a castle, try to stay away from big ticket purchases like appliances, electronics, or furniture. You will also want to keep away from vacations and vehicle purchases until your 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. Using cash to purchase expensive items can also create a bad idea: many lending institutions take into consideration your available cash when approving your mortgage loan.
Don't get a new job. Your recent career history should show stability. Finding a new job (particularly one with a bigger paycheck) may not jeopardize your ability to qualify for a loan. But in some cases, changing jobs during the loan application process might bring concern and affect your application.
Don't switch banks or move money around in your bank accounts. Most lenders will require you to produce recent bank statements for your accounts: checking, savings, money market, and other liquid assets. In order to detect fraud, lenders look for clear documentation of how you earn your living and where any additional funds come from. Even for innocent reasons, transferring funds or switching banks might make it difficult for the lender to verify your bank history.
Don't give your FSBO (for sale by owner) seller a "good faith" deposit, made out directly to him. As a rule, your good faith money is yours, not the seller's until closing. Your FSBO seller may not know that the good faith funds is to be applied to your expenses at closing. Get an attorney or other neutral person who is able to hang on to the money or place it in a trust account until you close. The final disposition of earnest money, if your sale fails, should be included in the purchase agreement with the seller.