Don't Trip Yourself up While Buying your Home
With the thrill that comes with an accepted offer and a "yes" from the lender, some homebuyers make the error of taking their enthusiasm straight to the mall or appliance store. Until the keys are handed over, there are still some hurdles to jump. Below you'll find a list of things to avoid during this crucial time of your home purchase.
Don't buy luxury items. You may be itching to turn your new kitchen into a showplace, or celebrate your new dream home, but stay away from big purchases like furniture, cars, appliances, or vacations until closing. Your lender may send up red flags if you buy new appliances on your credit cards in the middle of your loan process. Using cash to purchase big items can also create a bad idea: most lenders take into consideration your available cash when approving your loan.
Don't get a new job. Lenders like to see a consistent work history on your paperwork. Getting a new job before you apply for a mortgage loan may not jeopardize your approval at all. However, if you switch careers before approval, your mortgage process could fail or be stalled.
Don't move cash around or switch banks. While your lending institution considers your mortgage application, you will likely be instructed to submit bank statements for the last few months on your saving and checking accounts, money market accounts and other liquid assets. In order to avoid fraud, lenders need clear documentation of how you earn your money and where additional wealth comes from. Even for innocent reasons, moving around finances or switching banks could make it harder for the lender to verify your account history.
Don't give funds directly to your seller (commonly in the case of of "for sale by owner") for earnest money. Your good faith deposit does not belong to the seller: it remains yours until the transaction is final. Your seller might not realize that any good faith money is to go toward your expenses at closing. Find a lawyer or other neutral party who will hold the funds or put them in a trust account until you close. Should your sale fall through, your contract with the seller should specify to whom this good faith deposit should go.
At C2 Financial Corporation, we answer questions about this process every day. Call us at (727) 478-2797.
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