Don't Trip Yourself up While Buying a Home
In the rush of excitement 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 appliance store. It's best to remember that until closing, your lender is watching your finances very closely. Here are some things to refrain from before closing to be sure the transaction goes smoothly.
Don't throw your money around. It may be tempting to buy that new sofa for the soon-to-be-yours living room, but it's best to stay away from making large purchases like furniture, appliances, electronic equipment, or cars until your home loan closes. 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. Because lenders are perusing your bank accounts, a large cash purchase is also a bad idea.
Don't look for a new job. Your recent career history should show consistency. Finding a new job (particularly one with a bigger salary) may not affect your ability to qualify for your mortgage. However, if you switch careers before your loan is approved, your loan process could fail or be stalled.
Don't switch your accounts to a new bank or move around your finances. Bank statements from recent months for all of your accounts (savings, checking, money market, and other assets) will likely be reviewed as the lender considers your mortgage application. In order to eliminate fraud, lenders want to see a consistent portrayal of how you earn your living and where additional funds come from. Switching banks or transferring finances to another account - for whatever purpose - may hinder the documentation of your funds.
Don't hand over earnest money directly to the seller in a FSBO (for sale by owner) purchase. Until the completion of the deal, the earnest money actually belongs to you. Some sellers may not realize that any good faith funds must go toward your expenses at closing. An attorney or other type of neutral party can hold onto your funds, or you may place them temporarily into a trust account until closing. Should your sale fall through, the contract with the seller should document to whom the good faith funds should go.