Don't Trip Yourself up While Buying a Home
What's better than buying a bunch of new furnishings to go in your future home? Not much. But making large purchases before closing could be trouble. There are still a few major hurdles to jump before closing. We have listed some things below you will want to stay away from when waiting for closing.
Don't overspend on big-ticket items It may be tempting to buy that new sofa for the soon-to-be-yours den, but it's advisable to avoid making major purchases like furniture, appliances, jewelry, or cars until closing. Using credit cards to buy furniture could compromise your loan process by altering your numbers dramatically. It's even a bad idea to make those huge purchases using cash. Lending Institutions are examining your available cash when considering your loan.
Don't go on a job search. Lending Institutions feel comfortable seeing a consistent career history on your application. Getting a new job 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 your loan is approved, your loan process could fail or be stalled.
Don't move money around or switch banks. Bank statements from recent months for your accounts (checking, savings, money market, and other assets) will probably be studied as the lending institution considers your application. To detect potential fraud, most lending institutions require a thorough paper trail to verify the source of all cash. Switching banks or moving money elsewhere - for whatever reason - may hinder the review of your funds.
Don't give 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 transaction is final. Any earnest money is to be used for your expenses upon closing; your FSBO seller might not realize this. Get an attorney or other neutral party who is able to hang on to the funds or put them in a trust account until closing. The disposition of earnest funds, in the case of a failed transaction, should be included in the purchase agreement with your seller.
At Georgetown Mortgage, we answer questions about this process every day. Give us a call at (214) 448-4641.