Don't Trip Yourself up While Buying a New Home
Many new homebuyers make the mistake of rushing out to buy things to fill their home soon after the seller accepts their offer and the loan is approved. There are still a few major hurdles to jump before closing. Here are some actions to avoid during the home buying process to assure your transaction goes smoothly.
Don't make expensive purchases. Although you may be dreaming of ways to turn your new home into a showplace, avoid major purchases like appliances, electronics, or expensive furnishings. We also recommend that you avoid vacations and vehicle purchases until the closing of your loan. Your lender may send up red flags if you buy your furniture on your credit cards during your loan process. It's even a bad idea to make those huge purchases using cash. Lenders are looking at your cash on hand when considering your loan.
Don't get a new career. Your recent job history should show consistency. Getting a new job before you start the application process for a loan may not get in the way of your approval at all. However, switching jobs in the middle of the loan process may affect your approval.
Don't move money around or switch banks. Bank statements from recent months for accounts in your name (savings, checking, money market, and other accounts) will probably be studied as the lending institution considers your approval. In order to avoid fraud, lenders look for a consistent portrayal of how you earn your living and where additional funds come from. Even for practical reasons, moving around funds or switching banks might make it harder for the lending institution to document your account history.
Don't give funds directly to your seller (generally in cases of "for sale by owner") to be considered earnest money. Your earnest money does not belong to the seller: it is actually yours until closing. Although your seller may not understand this, any earnest money must go toward your closing expenses. Find an attorney or other neutral person who can hang on to the funds or put them in a trust account until closing. If your home purchase fails, your contract with the seller should indicate to whom the good faith funds should go.
At Trustin Mortgage, LLC, we answer questions about this process every day. Give us a call at (302) 765-8089.
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