Dont's When Buying a Home
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What's more fun than getting a bunch of new stuff to go in your future home? Nothing. However, making big purchases before closing could be trouble. Until closing, there still remain some hurdles to jump. We have given you a list of actions below you will want to stay away from when waiting for your loan to close.
Don't make expensive purchases. You may be itching to turn your new living room into a home magazine cover, or celebrate your new dream home, but keep away from major purchases like furniture, cars, appliances, or vacations until your loan closes. Using plastic to buy new living room furniture could compromise your loan process by changing your numbers dramatically. It's even a mistake to make those large purchases using cash. Lending Institutions are looking at your cash on hand when considering your loan.
Don't look for a new job Stability in your career history is a good thing to lenders. Getting a new job may not compromise your ability to qualify for a mortgage loan - especially if you are improving your salary. But for some, changing jobs during the mortgage loan approval process could bring concern and hinder your approval.
Don't switch banks or move finances around in your bank accounts. Bank statements from the last few months for accounts in your name (checking, savings, money market, and other assets) will probably be studied as the lender considers your mortgage application. To detect potential fraud, most loans need detailed paperwork to document the source of all funds. No matter the reason, switching banks or moving money from one account to another can raise a red flag with your lender and slow down your loan process.
Don't give earnest money directly to the seller in a FSBO (for sale by owner) purchase. As a rule, your good faith deposit is yours, not the seller's until the deal closes. Any good faith money is to go toward your expenses closing; your individual seller might not realize this. You'll want to put the funds into a trust account, or get a neutral person, like a lawyer to hold them until the deal closes. If your home purchase fails, the contract with the seller should document where the good faith funds should go.
Diamond Mortgage Lending can answer questions about these "Don'ts" and many others. Give us a call at 888-365-2023.