Don't Trip Yourself up While Buying a Home
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With the thrill that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of carrying their enthusiasm straight to the mall or furniture store. There still remain a few major hurdles to jump before the keys are handed over. Here are some things to refrain from before closing to be sure the transaction goes well.
Don't overspend on big-ticket items You may be tempted to order that new sofa for the soon-to-be-yours living room, but it's advisable to stay away from making big ticket buys like furniture, appliances, jewelry, or vacations until your home loan closes. Using credit cards to buy new living room furniture could compromise your lending process by changing your numbers dramatically. Using cash to purchase big-ticket items can even be a problem: most lenders take into consideration your available cash when approving your loan.
Don't go on a career search. Lending Institutions look for a consistent work history on your paperwork. Finding a new job (particularly one with a bump in salary) may not affect your ability to qualify for a loan. But for some, changing careers during the loan approval process could bring concern and hinder your application.
Don't switch your accounts to a new bank or move around your finances. Your lending institution will instruct the submission of recent bank statements for accounts in your name: checking, savings, money market, and other liquid assets. Your lending institution will need to see a consistent rise and fall of your money over the month, in order to avoid fraud. Switching banks or moving funds to another account - no matter the purpose - may make it harder for the lender to document your funds.
Don't give your FSBO (for sale by owner) seller earnest money, cash in hand. As a rule, your good faith money belongs to you, not to the seller up until the deal closes. Some sellers may not know that any earnest money is to go toward your expenses at closing. Find a lawyer or other neutral person who is able to hang on to the deposit or put it in a trust account until you close. The purchase agreement should indicate who gets the earnest funds if the home purchase fails.