Don't Trip Yourself up While Buying your Home
What's more fun than getting a bunch of new furnishings to adorn your future home? Not much. But making large purchases before closing could be trouble. Until closing, there are still some hurdles to jump. Here are some things to stay clear of before closing to be sure the transaction goes well.
Don't buy big-ticket items. Although you may be planning ways to turn your new house into a showplace, try to stay away from big ticket purchases like appliances, electronics, or furniture. You will also want to avoid vacations and car purchases until your loan closes. Your credit numbers could be altered suddenly if you make a huge purchase using plastic. Using cash to purchase big-ticket items can even create a problem: many banks look at your cash on hand when approving your mortgage loan.
Don't get a new career. Your recent job history should show consistency. Getting a new career before you start the application process for a mortgage loan may not get in the way of your approval at all. However, if you switch careers before you qualify, your mortgage process could fail or be slowed down.
Don't take your accounts to a new bank or move around your cash. While the lending institution reviews your loan package, you will likely be instructed to produce bank statements for the last few months for your checking and savings accounts, money market funds and other liquid wealth. In order to eliminate fraud, lenders require clear documentation of how you earn your money and where any additional funds come from. Even for practical reasons, moving around funds or switching banks could make it harder for your lending institution to document your bank history.
Don't hand over a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Your good faith deposit does not belong to the seller: it is actually yours until the sale closes. Although your FSBO seller may not understand this, the good faith money must be applied to the buyer's closing expenses. An attorney or other type of neutral party can hang onto your earnest money, or you may put it temporarily into a trust account until you close. The final disposition of good faith funds, in the case of a failed transaction, should be indicated in the purchase agreement with your seller.
Back Bay Funding can walk you through the pitfalls of getting a mortgage. Call us: (888) 299-4585.