Don't Trip Yourself up While Buying a Home
What's better than buying a bunch of new stuff to go in your future home? Nothing. But making big purchases before your loan closes could be trouble. Keep in mind that until your keys are in hand, your lender is watching your accounts very closely. Here are some things to avoid during the home buying process to be sure your transaction goes smoothly.
Don't empty your wallet on big-ticket items You may be itching to turn your new living room into a showplace, or celebrate your new castle, but keep away from big purchases like furniture, cars, appliances, or vacations until closing. Financing new furniture with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. Since lenders are perusing your bank accounts, a large cash purchase is also not advised.
Don't go on a career search. Lending Institutions feel comfortable seeing a consistent job history on your paperwork. Finding a new career (particularly one with a bump in salary) may not change your ability to qualify for a mortgage. But in some cases, changing careers during the mortgage approval process could bring concern and stymie your approval.
Don't switch banks or move cash around in your bank accounts. Your lender will instruct the submission of recent bank statements on all of your accounts: checking, savings, money market, and other liquid assets. To detect potential fraud, most lending institutions need a detailed paper trail to determine the source of all funds. Switching banks or moving money to another account - no matter the reason - may hinder the documentation of your accounts.
Don't give your FSBO (for sale by owner) seller earnest money, delivered to his door. Your good faith money does not belong to the seller: it is actually yours until the sale closes. Although some FSBO sellers may not know this, the earnest money should be used for your closing expenses. A neutral party, like an attorney can hold onto your earnest money, or you may put it temporarily into a trust account until closing. The purchase contract should specify who gets the earnest funds if the home purchase falls through.
Hawk Mortgage Group can answer questions about these "Don'ts" and many others. Call us at (443) 619-7900.