Don't Trip Yourself up While Buying a New Home
Looking for mortgage advice? We will be glad to help! Call us at 408-823-2321. Ready to begin? Apply Online Now
Many new homebuyers make the mistake of rushing out to buy new things for their home as soon as the seller says "yes" and the loan is approved. Keep in mind that until you get the keys, your lender is watching your accounts very closely. Below you'll find a list of things to avoid during this critical time of your home purchase.
Don't buy luxury items. You may be itching to turn your new living room into a home magazine cover, or celebrate your new castle, but keep away from major purchases like furniture, cars, appliances, or vacations until closing. Using plastic to buy furniture could compromise your lending process by distorting your numbers. It's also a red flag to make those huge purchases with cash. Lending Institutions are looking at your cash on hand when considering your loan.
Don't get a new career. Stability in your work history is a good thing to banks and other lenders. Finding a new career (especially one with a better salary) may not affect your ability to qualify for a loan. However, if you switch careers before you qualify, your loan process could fail or be slowed down.
Don't change banks or move finances around in your bank accounts. As your lending institution considers your mortgage loan package, you will probably be required to provide bank statements for the last two or three months on your checking and savings accounts, money market funds and other liquid wealth. To detect potential fraud, most lenders need detailed paperwork to verify the source of all funds. Changing banks or moving money elsewhere - for whatever purpose - may make it harder for the lender to document your funds.
Don't give funds directly to your seller (commonly in the case of of "for sale by owner") for a "good faith" deposit. As a rule, your good faith deposit belongs to you, not the seller up until closing. Your good faith funds are to go toward your expenses closing; some FSBO sellers may not understand this. Find an attorney or other neutral person who is able to hang on to the funds or put them in a trust account until you close. If your sale falls through, the contract with the seller should dictate to whom the earnest money should go.
At Ocean Mortgage, we answer questions about this process every day. Call us at 408-823-2321.