Don't Trip Yourself up While Buying a New Home
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Many new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller says "yes" and the lender approves the loan. There are still a few major hurdles to jump before your loan closes. Here are some things to avoid before closing to assure the transaction goes well.
Don't throw your money around. You may be tempted to buy that new entertainment center for the soon-to-be-yours family room, but it's best to stay away from making major buys like furniture, appliances, jewelry, or vacations until your home loan closes. Your credit numbers could be altered suddenly if you purchase new furniture using plastic. Since lending institutions are examining your bank accounts, a large cash purchase is also a mistake.
Don't look for a new career Consistency in your job history is a positive thing to lenders. Getting a new job before you apply for a mortgage may not jeopardize your approval at all. However, switching careers in the middle of the loan process may affect whether or not you are approved.
Don't take your accounts to a new bank or move around your cash. Bank statements from recent months for accounts in your name (checking, savings, money market, and other assets) will likely be reviewed as the lender considers your loan application. To eliminate potential fraud, most loans require detailed paperwork to determine the source of all incoming funds. No matter the reason, switching banks or moving money from one account to another might raise a red flag with your lender and slow your approval process.
Don't give funds directly to your seller (commonly in the case of of "for sale by owner") for earnest money. Your good faith money does not belong to the seller: it is actually yours until the sale closes. Although your seller might not realize this, your good faith funds must be applied to the buyer's closing expenses. Get a lawyer or other neutral party who is able to hold the money or put it in a trust account until you close. The contract should dictate who gets the earnest funds if the transaction fails.
At Synergistic Wealth Management llc, we answer questions about this process every day. Call us at 480-282-3662.