Don’t Jeopordize Your Chances When Buying a Home
With the thrill that comes with an accepted offer and a “yes” from the lender, some homebuyers make the mistake of taking their enthusiasm straight to the mall or furniture store. There are still a few major hurdles to jump before closing. Below you’ll find a list of things to avoid during this crucial time of your home purchase.
Don’t buy big-ticket items. You may be itching to turn your new kitchen 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. Using credit cards to buy new living room furniture could compromise your lending process by changing your numbers dramatically. Even though lenders check your credit report at the start of escrow, they will check it again right before close to make sure no major changes occured. Since lenders are looking closely at your financial accounts, a large cash purchase is also a bad idea.
Don’t look for a new career. Your recent job history should show consistency. Finding a new career (especially one with a bigger salary) may not change your ability to qualify for a loan. But for some, changing careers during the mortgage application process might raise concern and stymie your approval. Hang in there until the loan closes, and then proceed with any career moves.
Don’t switch banks or move cash around in your accounts. As the lending institution reviews your loan application, you will probably be asked to provide bank statements for the last two months for your checking and savings accounts, money market accounts and other liquid wealth. To eliminate potential fraud, most lenders want detailed paperwork (paper trail) to document the source of all cash. Generally, lenders like your assets to be “seasoned,” meaning the money has been documented for at least 60 days. Switching banks or transferring money elsewhere – no matter the 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 remains yours. Any earnest funds are to be applied to your expenses at closing; some FSBO sellers might not understand this. An attorney, or other type of neutral party can hang onto your deposit, or you may put it temporarily into a trust account until you close. Should your home purchase fail, your purchase agreement should indicate to whom your earnest money should go.
If you have any questions about buyer strategies, or the home loan process, visit my website at www.AlissaAlvarez.com
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