Don't Trip Yourself up While Buying your New Home
What's better than getting a bunch of new stuff to go in your future home? Nothing. But buying big ticket items before your loan closes can be a mistake. It's wise to remember that until closing, your lender is watching your finances very closely. Here are some things to avoid before closing to assure your transaction goes smoothly.
Don't empty your wallet on big-ticket items Although you will be dreaming of ways to turn your new house into a castle, avoid major purchases like appliances, electronics, or furniture. We also recommend that you avoid vacations and vehicle purchases until your loan closes. Financing your stainless steel appliances with a store card or a bank credit card could put your credit worthiness at risk during the time it means the most. Using cash to buy big-ticket items can also be a problem: many banks consider your available cash when approving your mortgage.
Don't go on a career search. Lending Institutions feel comfortable seeing a consistent job history on your application forms. Getting a new job may not affect your ability to qualify for a loan - particularly if you are getting a bigger paycheck. However, getting a new career during the application process might affect your approval.
Don't move cash around or switch banks. While the lender reviews your mortgage loan application, you will probably be instructed to submit bank statements for recent months on your saving and checking accounts, money market accounts and other liquid assets. To eliminate potential fraud, most lenders require thorough paperwork to document the source of all cash. Changing banks or transferring funds elsewhere - even if its just to consolidate funds - may make it harder for your lender to verify your funds.
Don't hand over a "good faith" deposit 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 sale is final. Some sellers might not realize that this good faith money must be used for your expenses upon closing. You'll want to put the funds into a trust account, or get an attorney to hold them until the deal closes. The disposition of good faith funds, in the case of a failed transaction, should be documented in the purchase agreement with your seller.
Saab Mortgage can answer questions about these "Don'ts" and many others. Give us a call at 703-288-0777.
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